[LETTERHEAD OF NEBS APPEARS HERE]
November 6, 1995
William C. Lowe
New England Business Service, Inc.
500 Main Street
Groton, Massachusetts 01471
Dear Bill:
New England Business Service, Inc., a Delaware corporation (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 shareholders. In this connection, the Company recognizes that,
as is the case with many publicly held corporations, the possibility of a change
in control may arise and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company and its
shareholders. Accordingly, the Board of Directors of the Company (the "Board")
has determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the Company's management to
their assigned duties without distraction in circumstances arising from the
possibility of a change in control of the Company. In particular, the Board
believes it important, should the Company or its shareholders receive a proposal
for transfer of control of the Company, that you be able to assess and advise
the Board whether such proposal would be in the best interests of the Company
and its shareholders and to take such other action regarding such proposal as
the Board might determine to be appropriate, without being influenced by the
uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this
letter agreement, which has been approved by the Board, sets forth the severance
benefits which the Company agrees will be provided to you in the event your
employment with the Company is terminated subsequent to a "change in control" of
the Company under the circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
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(i) Except as otherwise provided in paragraph (ii) below, the Company
or you may terminate your employment at any time, subject to the Company's
providing the benefits hereinafter specified in accordance with the terms
hereof.
(ii) In the event a tender offer or exchange offer is made by a Person
(as hereinafter defined) for more than 25% of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote at
elections of directors ("Voting Securities"), including shares of common stock
($1.00 par value) of the Company (the "Company Shares"), you agree that you will
not leave the employ of the Company (other than as a result of Disability or
upon Retirement, as such terms are hereinafter defined) and will render the
services contemplated in the recitals to this Agreement until such tender offer
or exchange offer has been abandoned or terminated or a change in control of the
Company, as defined in Section 3 hereof, has occurred. For purposes of this
Agreement, the term "Person" shall mean and include any individual, corporation,
partnership, group, association or other "person", as such term is defined in
Section 3(a)(9) and as used in Section 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act"), other than the Company, a wholly owned subsidiary of
the Company or any employee benefit plan(s) sponsored by the Company or a
subsidiary of the Company.
2. Term of Agreement. This Agreement shall commence on the date
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hereof and shall continue in effect until June 30, 1996; provided, however, that
this Agreement shall continue in effect for a period of twenty-four (24) months
after a change in control of the Company, as defined in Section 3 hereof, if
such change in control shall have occurred during the term of this Agreement.
Notwithstanding anything in this Section 2 to the contrary, this Agreement shall
terminate if you or the Company terminate your employment prior to a change in
control of the Company as provided in Section 1(i) above.
3. Change in Control. For purposes of this Agreement, a "change in
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control" of the Company shall be deemed to have occurred at such time as (a) any
Person is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% or more of the combined voting
power of the Company's Voting Securities; or (b) during any period of not more
than two years, individuals who constitute the Board as of the beginning of the
period and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a) or (c) of this sentence)
whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at such time or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or (c) the shareholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the Voting Securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of
the surviving entity) at least 50% of the combined voting power of the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the shareholders of the Company approve a plan
of complete liquidation of the Company or any agreement for the sale or
disposition by the Company or all or substantially all of the Company's assets.
Notwithstanding anything in the foregoing to the contrary, no change in control
shall be deemed to have occurred for purposes of this Agreement by virtue of any
transaction which results in you, or a group of Persons which includes you,
acquiring, directly or indirectly, 50% or more of the combined voting power of
the Company's Voting Securities.
4. Termination Following Change in Control. If any of the events
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described in Section 3 hereof constituting a change in control of the Company
shall have occurred, you shall be entitled to the benefits provided in Section 5
hereof upon the termination of your employment with the Company within twenty-
four (24) months after such event, unless such termination is (a) because of
your death, (b) by the Company for Cause, Disability or Retirement or (c) by you
other than for Good Reason (as all such capitalized terms are hereinafter
defined).
(i) Disability. Termination by the Company of your employment based
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on "Disability" shall mean termination because of your absence from your duties
with the Company on a full time basis for one hundred twenty (120) consecutive
days as a result of your incapacity due to physical or mental illness, unless
within thirty (30) days after Notice of Termination (as hereinafter defined) is
given to you following such absence you shall have returned to the full time
performance of your duties.
(ii) Retirement. Termination by you or by the Company of your
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employment based on "Retirement" shall mean termination on or after your normal
retirement date as defined in the Company's Pension Plan (or any successor or
substitute plan or plans of the Company put into effect prior to a change in
control) (the "Pension Plan").
(iii) Cause. Termination by the Company of your employment for "Cause"
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shall mean termination upon (a) the willful and continued failure by you
to perform substantially your duties with the Company (other than any such
failure resulting from your incapacity due to physical or mental illness) after
a demand for substantial performance is delivered to you by an authorized
officer of the Company which specifically identifies the manner in which such
executive believes that you have not substantially performed your duties, or
(b) the willful engaging by you in illegal conduct which is materially and
demonstrably injurious to the Company. For purposes of this paragraph (iii), no
act, or failure to act, on your part shall be considered "willful" unless done,
or omitted to be done, by you without reasonable belief that your action or
omission was in, or not opposed to, the best interests of the Company. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by you in good faith
and in the best interests of the Company. It is also expressly understood that
your 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 your engagement in such activities. Notwithstanding the foregoing, you
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds of the entire membership of the
Board at a meeting of the Board called and held for the purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board you were guilty of the conduct set forth above in (a) or (b) of this
paragraph (iii) and specifying the particulars thereof in detail.
(iv) Good Reason. Termination by you of your employment for "Good
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Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there
has been an adverse change in your status or position(s) as an executive
officer of the Company as in effect immediately prior to the change in
control, including, without limitation, any adverse change in your status or
position as a result of a diminution in your duties or responsibilities
(other than, if applicable, any such change directly attributable to the
fact that the Company is no longer publicly owned) or the assignment to you
of any duties or responsibilities which are inconsistent with such status or
position(s), or any removal of you from or any failure to reappoint or
reelect you to such position(s) (except in connection with the termination
of your employment for Cause, Disability or Retirement or as a result of
your death or by you other than for Good Reason);
(B) a reduction by the Company in your base salary as in effect
immediately prior to the change in control;
(C) the failure by the Company to continue in effect any Plan (as
hereinafter defined, excluding any stock option plan) in which you are
participating at the time of the change in control of the Company (or Plans
providing you 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 your continued participation in any of such Plans on at least as
favorable a basis to you as is the case on the date of the change in control
or which would materially reduce your benefits in the future under any of
such Plans or deprive you of any material benefit enjoyed by you at the time
of the change in control;
(D) the failure by the Company to provide and credit you with the
number of paid vacation days to which you are then entitled in accordance
with the Company's normal vacation policy as in effect immediately prior to
the change in control;
(E) the Company's requiring you to be based at an office that is
greater than 50 miles from where your 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 you undertook on behalf of the Company prior to the change in control;
(F) the failure by the Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement contemplated by Section 6
hereof;
(G) any purported termination by the Company of your employment which
is not effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (v) below (and, if applicable, paragraph (iii)
above); and for purposes of this Agreement, no such purported termination
shall be effective; or
(H) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the business of the
Company which, prior to the change in control, you were permitted by the
Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan such as
an incentive, stock option or restricted stock 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 intended to benefit employees. Notwithstanding anything
contained in this Agreement to the contrary, a termination by you of your
employment for any reason during the 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.
(v) Notice of Termination. Any purported termination by the Company
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or by you following a change in control shall be communicated by written Notice
of Termination to the other party hereto. 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.
(vi) Date of Termination. "Date of Termination" following a change
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in control shall mean (a) if your employment is to be terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that you shall
not have returned to the performance of your duties on a full-time basis during
such thirty (30) day period), (b) if your employment is to be terminated by the
Company for Cause or by you pursuant to Sections 4(iv)(F) and 6 hereof or for
any other Good Reason, the date specified in the Notice of Termination, or
(c) if your employment is to be terminated by the Company for any reason other
than Cause, the date specified in the Notice of Termination, which in no event
shall be a date earlier than ninety (90) days after the date on which a Notice
of Termination is given, unless an earlier date has been expressly agreed to by
you in writing either in advance of, or after, receiving such Notice of
Termination.
In the case of termination by the Company of your employment for Cause, if you
have not previously expressly agreed in writing to the termination, then within
thirty (30) days after receipt by you of the Notice of Termination with respect
thereto, you may notify the Company that a dispute exists concerning the
termination, in which event the Date of Termination shall be the date set either
by mutual written agreement of the parties or by the arbitrators in a proceeding
as provided in Section 13 hereof. During the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect just prior to
the time the Notice of Termination is given (or, if higher, as in effect
immediately prior to the change in control) and until the dispute is resolved in
accordance with Section 13.
5. Compensation Upon Termination or During Disability; Other
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Agreements.
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(i) During any period following a change in control of the Company
that you fail to perform your duties as a result of incapacity due to physical
or mental illness, you shall continue to receive your salary at the rate then in
effect and any benefits or awards under any Plans shall continue to accrue
during such period, to the extent not inconsistent with such Plans, until your
employment is terminated pursuant to and in accordance with paragraphs 4(i) and
4(vi) hereof. Thereafter, your benefits shall be determined in accordance with
the Plans then in effect.
(ii) If your employment shall be terminated for Cause following a
change in control of the Company, the Company shall pay you your salary through
the Date of Termination at the rate in effect just prior to the time a Notice of
Termination is given plus any benefits or awards (including both the cash and
stock components) which pursuant to the terms of any Plans have been earned or
become payable, but which have not yet been paid to you. Thereupon the Company
shall have no further obligations to you under this Agreement.
(iii) Subject to Section 8 hereof, if, within twenty-four (24) months
after a change in control of the Company, as defined in Section 3 above, shall
have occurred, your employment by the Company shall be terminated (a) by the
Company other than for Cause, Disability or Retirement or (b) by you for Good
Reason, then the Company shall pay to you, no later than the fifth day following
the Date of Termination, without regard to any contrary provisions of any Plan,
the following:
(A) (x) your salary through the Date of Termination at the rate in
effect just prior to the time a Notice of Termination is given (or, if
higher, as in effect immediately prior to the change in control) and (y)
any benefits or awards (including both the cash and stock components) which
pursuant to the terms of any Plans have been earned or become payable, but
which have not yet been paid to you; and
(B) as severance pay and in lieu of any further salary for periods
subsequent to the Date of Termination, the sum of $1,667,043.
(iv) If, within twenty-four (24) months after a change in control of
the Company, as defined in Section 3 above, shall have occurred, your employment
by the Company shall be terminated (a) by the Company other than for Cause,
Disability or Retirement or (b) by you for Good Reason, then the Company shall
maintain in full force and effect, for the continued benefit of you and your
dependents for a period terminating on the earliest of (a) three years after the
Date of Termination, (b) the commencement date of equivalent benefits from a new
employer or (c) your normal retirement date under the terms of the Retirement
Plan, all insured and self-insured employee welfare benefit Plans in which you
were entitled to participate immediately prior to the Date of Termination,
provided that your continued participation is possible under the general terms
and provisions of such Plans (and any applicable funding media) and you continue
to pay an amount equal to your regular contribution under such plans for such
participation. In the event that your participation in any such Plan is barred,
the Company, at its sole cost and expense, shall arrange to have issued for the
benefit of you and your dependents individual policies of insurance providing
benefits substantially similar (on an after-tax basis) to those which you
otherwise would have been entitled to receive under such Plans pursuant to this
paragraph (iv) or, if such insurance is not available at a reasonable cost to
the Company, the Company shall otherwise provide you and your dependents with
equivalent benefits (on an after-tax basis). You shall not be required to pay
any premiums or other charges in an amount greater than that which you would
have paid in order to participate in such Plans. If, at the end of three years
after the Termination Date, you have not reached your normal retirement date,
you are participating in any of such Plans and you have not previously received
or are not then receiving equivalent benefits from a new employer, the Company
shall arrange, at its sole cost and expense, to enable you to convert your and
your dependents' coverage under such Plans to individual policies or programs
upon the
same terms as employees of the Company may apply for such conversions.
(v) Except as specifically provided in paragraph (iv) above, the
amount of any payment provided for in this Section 5 shall not be reduced,
offset or subject to recovery by the Company by reason of any compensation
earned by you as the result of employment by another employer after the Date of
Termination, or otherwise.
6. Successors; Binding Agreement.
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(i) The Company will seek, by written request at least five business
days prior to the time a Person becomes a Successor (as hereinafter defined), to
have such Person assent to the fulfillment of the Company's obligations under
this Agreement. Failure of such Person to furnish such assent by the later of
(A) three business days prior to the time such Person becomes a Successor or
(B) two business days after such Person receives a written request to so assent
shall constitute Good Reason for termination by you of your employment if a
change in control of the Company occurs or has occurred. For purposes of this
Agreement, "Successor" shall mean any Person that succeeds to, or has the
practical ability to control (either immediately or with the passage of time),
the Company's business directly, by merger or consolidation, or indirectly, by
purchase of the Company's Voting Securities or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there be no such designee, to your estate.
(iii) For purposes of this Agreement, the "Company" shall include any
corporation or other entity which is the surviving or continuing entity in
respect of any merger, consolidation or form of business combination in which
the Company ceases to exist.
7. Fees and Expenses; Mitigation. (i) The Company shall reimburse
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you, on a current basis, for all reasonable legal fees and related expenses
incurred by you in connection with the Agreement following a change in control
of the Company, including, without limitation, (a) all such fees and expenses,
if any, incurred in contesting or disputing any
termination or your employment or incurred by you in seeking advice with respect
to the matters set forth in Section 8 hereof or (b) your seeking to obtain or
enforce any right or benefit provided by this Agreement, in each case,
regardless of whether or not your claim is upheld by a court of competent
jurisdiction; provided, however, you shall be required to repay any such amounts
to the Company to the extent that a court issues a final and non-appealable
order setting forth the determination that the position taken by you was
frivolous or advanced by you in bad faith.
(ii) You shall not be required to mitigate the amount of any payment
the Company becomes obligated to make to you in connection with this Agreement,
by seeking other employment or otherwise.
8. Taxes.
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(i) All payments to be made to you under this Agreement will be
subject to required withholding of federal, state and local income and
employment taxes.
(ii) Notwithstanding anything in the foregoing to the contrary, if
any of the payments provided for in this Agreement, together with any other
payments which you have the right to receive from the Company or any corporation
which is a member of an "affiliated group" (as defined in Section 1504(a) of the
Internal Revenue Code of 1986 (the "Code") without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a "parachute
payment" (as defined in Section 280G(b)(2) of the Code), the payments pursuant
to this Agreement shall be reduced (reducing first the payments under Section
5(iii)(B)) to the largest amount as will result in no portion of such payments
being subject to the excise tax imposed by Section 4999 of the Code; provided,
however, that the determination as to whether any reduction in the payments
under this Agreement pursuant to this proviso is necessary shall be made by you
in good faith, and such determination shall be conclusive and binding on the
Company with respect to its treatment of the payment for tax reporting purposes.
9. Survival. The respective obligations of, and benefits afforded
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to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 13 and 14 of
this Agreement shall survive termination of this Agreement.
10. Notice. For the purposes of this Agreement, notices and all
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other 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 mail, return receipt requested, postage prepaid and addressed, in the
case of the Company, to the address set forth on the first page of this
Agreement or, in the case of the undersigned employee, to the address set forth
below his signature, provided that all notices to the Company shall be directed
to the attention of the Chairman of the Board of the Company, with a copy to
Joseph R. Ramrath, Hill & Barlow, One International Place, Boston, MA 02110, 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,
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waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and an authorized officer of the Company. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or 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 any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Massachusetts.
12. Validity. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Arbitration. Any dispute or controversy arising under or in
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connection with this Agreement shall be settled exclusively by arbitration in
Boston, Massachusetts by three arbitrators in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrators' award in any court having jurisdiction; provided, however, that you
shall be entitled to seek specific performance of your 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. The Company shall bear all
costs and expenses arising in connection with any arbitration proceeding
pursuant to this Section 13.
14. Employee's Commitment. You agree that subsequent to your period
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of employment with the Company, you will not at any time communicate or disclose
to any unauthorized person, without the written consent of the Company, any
proprietary processes of the Company or any subsidiary or other confidential
information concerning their business, affairs, products, suppliers or customers
which, if disclosed, would have a material adverse effect upon the business or
operations of the Company and its subsidiaries, taken as a whole; it being
understood, however, that the obligations of this Section 14 shall not apply to
the extent that the aforesaid matters (a) are disclosed in circumstances where
you are legally required to do so or (b) become generally known to and available
for use by the public otherwise than by your wrongful act or omission.
15. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
If this letter correctly sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
NEW ENGLAND BUSINESS SERVICE, INC.
By /s/ Richard H. Rhoads
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Richard H. Rhoads
Chairman of the Board
Agreed to this 6th day
of November, 1995.
/s/ William C. Lowe
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William C. Lowe
12345-4 Monument Street
Concord, MA 01742