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Exhibit 10.25
CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of March 12, 2005, by and
between Keane, Inc., a Massachusetts corporation with its principal place of
business at 100 City Square, Boston, Massachusetts 02129 ("Keane"), and Laurence
D. Shaw (the "Executive"). Keane and the Executive are referred to together
herein as the "Parties."
WHEREAS, the Executive is currently employed as Senior Vice President,
International Operations, of the Company; and
WHEREAS, the Compensation Committee of the Board of Directors of the
Company has authorized certain severance provisions in respect of senior
executives of the Company following the occurrence of a change of control in
order to assist in the retention of the Company's executives;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Company and the Executive agree as
follows:
1. TERM OF EMPLOYMENT. Subject to the benefits described in paragraph 2,
the Company retains the right to terminate the employment of the
Executive at any time, including, without limitation, with or without
notice and with or without Cause.
2. SEVERANCE BENEFITS UPON TERMINATION AFTER CORPORATE CHANGE IN CONTROL.
If within one year after a Change in Control (as defined in Exhibit A
to this Agreement) the Executive's employment is terminated by the
Company without Cause or by the Executive for Good Reason, both as
defined below (the effective date of any such termination being
hereinafter referred to as the "Termination Date") the Executive shall
be entitled to the following severance benefits (and no others):
a. For a period of twenty-four months following the Termination Date
(the "Salary Continuation Period"), (on the normal payroll
schedule for the Executive in effect immediately prior to the
Termination Date) the Company shall continue to pay the Executive
the base salary and targeted annual bonus (monthly on a pro rata
basis), both at the rate in effect immediately before the
Termination Date, EXCEPT THAT in the case of a termination by the
Executive for Good Reason, disregarding any reduction thereof
that was the basis for such termination.
b. Upon the Termination Date, all stock options, restricted stock
and other equity awards previously granted to the Executive shall
become vested immediately and shall be exercisable in full in
accordance with the applicable stock option, restricted stock or
other form of equity agreement and the terms of any applicable
stock or equity plan.
c. The Termination Date shall be treated as a qualifying event under
the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA").
Under COBRA, if the Executive is covered by the group medical
and/or dental plan offered by Keane, the Executive and his or her
spouse and dependents are entitled to elect a temporary extension
of health and/or dental coverage at group rates in certain
instances where coverage under the plan would otherwise end
("Continuation Coverage"). If the Executive elects Continuation
Coverage under COBRA, during the period of such Continuation
Coverage, the Executive will be responsible for any contribution
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required from active employees of the Company under the
applicable group medical and/or dental plan. If and to the extent
this Section 2.c does not apply, as where the Executive is not
resident in or of the United States, the Executive shall receive
a monthly stipend to offset medical and/or dental benefits lost
following the Termination Date.
d. For 12 months, the Executive shall be entitled to continue
participation in the executive financial planning benefit in
effect as of the Termination Date.
e. Neither the Executive nor Keane shall have the right to
accelerate or to defer the delivery of the payments to be made
under this Section 2; PROVIDED, HOWEVER, that if the Executive is
a "specified employee" as defined in Section 409A(a)(2)(B)(i) of
the Internal Revenue Code of 1986, as amended (the "Code"), and
any of the payments to be made to the Executive under this
Section 2 constitute "nonqualified deferred compensation" within
the meaning of Section 409A of the Code, then the commencement of
the delivery of any such payments will be delayed to the date
that is six months after the Termination Date.
3. DEFINITIONS.
a. "GOOD REASON". "Good Reason" means termination at the Executive's
initiative within one year after a Change in Control (as defined
in Exhibit A to this Agreement) if:
(i) The Executive's title, duties, status, reporting
relationship, authority or responsibilities have been
materially and adversely affected; or
(ii) The Executive's compensation, including base salary and
target annual bonus, has been reduced by 10% or greater; or
(iii) The Executive's principal place of employment immediately
prior to the Change of Control is relocated to a location
more than 25 miles from such place of employment.
The Executive shall give the Company Notice of termination specifying
which of the foregoing provisions is applicable and the factual basis
therefor, and if the Company fails to remedy such material failure,
the Termination Date shall be the 30th business day after such Notice
is given or such other date as the Company and the Executive shall
agree.
b. "CAUSE". For purposes of this Agreement only, "Cause" means and
shall be limited to:
(i) wrongful misappropriation of the funds or property of the
Company;
(ii) use of alcohol or illegal drugs interfering with the
performance of the Executive's obligations, continuing
after written warning of such actions;
(iii) admission, confession, or plea bargain to, or conviction
of, a felony, or of any crime involving moral turpitude,
dishonesty, or unethical conduct;
(iv) commission of any willful, intentional or grossly negligent
act which would reasonably be expected to materially injure
the reputation, business or business relationships of the
Company or which would bring the
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Executive or the Company into disrepute, or the willful
commission of any act which is a breach of the Executive's
fiduciary duties to the Company;
(v) the deliberate or willful failure by the Executive (other
than by reason of the Executive's physical or mental
illness, incapacity or disability) to substantially perform
his duties with the Company and the continuation of such
failure for a period of 30 days after delivery by the
Company to the Executive of Notice specifying the scope and
nature of such failure and the Company's intention to
terminate the Executive for Cause; or
(vi) commission of any act which constitutes a material breach
of the policies of the Company, including but not limited
to the disclosure of any confidential information or trade
secrets pertaining to the Company or any of its clients.
For purposes of this Section, any act or failure to act of the
Executive shall not be considered "willful" unless done or omitted to
be done by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best
interest of the Company. The Company shall give the Executive Notice
of termination specifying which of the foregoing provisions is
applicable. The effective Termination Date shall be the 30th business
day after such Notice is given or such other date as the Company and
the Executive shall agree.
4. GROSS-UP PAYMENT.
a. In the event an Executive becomes entitled to any benefits or
payments under this Agreement or under any other agreement, plan
or arrangement to which the Company and the Executive are
parties, including any non-cash benefit or deferred payment or
benefit (the "Total Benefits"),
(i) where such payment or benefit is contingent on a Change in
Control (as defined in Exhibit A to this Agreement), and
(ii) in the event that any of the Total Benefits will be subject
to a tax imposed by Section 4999 of the Code (the "Excise
Tax"), due to classification as an excess parachute payment
in accordance with Section 280G of the Code,
the Company shall pay to him an additional amount (the "Gross-Up
Payment") such that the net amount retained by him, after
reduction of any Excise Tax on the Total Benefits and any
federal, state and local income tax, Excise Tax and FICA and
Medicare withholding taxes upon the payment provided for by this
Section, shall be equal to the Total Benefits. For purposes of
this Gross-Up Payment, the amount of the Excise Tax (if any)
imposed on any non-cash benefits or any deferred payment or
benefit shall be reasonably determined by the Company, after
consultation with its legal and tax advisors.
b. For purposes of determining the amount of the Gross-Up Payment,
an Executive shall be deemed to pay federal income taxes 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 his residence on the Termination Date,
net of the reduction in federal income taxes which could be
obtained from deduction of such state and local taxes (calculated
by
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assuming that any reduction under Section 68 of the Code in the
amount of itemized deductions allowable to him applies first to
reduce the amount of such state and local income taxes that would
otherwise be deductible by him).
c. In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account for purposes of
calculating the Gross-Up Payment, the Executive shall promptly
repay to the Company the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax, federal, state and local
income taxes and FICA and Medicare withholding taxes imposed on
the portion of the Gross-Up Payment being repaid by him to the
extent that such repayment results in a reduction in Excise Tax,
FICA and Medicare withholding taxes and/or federal, state or
local income taxes) plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code.
d. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder, the Company shall make an
additional Gross-Up Payment to him in respect of such excess
(plus any interest, penalties or additions payable by him with
respect to such excess) at the time that the amount of such
excess is finally determined.
e. The Gross Up Payment shall be made within two and a half months
after the Termination Date; PROVIDED, HOWEVER, that if the
Executive is a "specified employee" as defined in Section
409A(a)(2)(B)(i) of Code and any of the payments to be made to
the Executive under this Section 4 constitute "nonqualified
deferred compensation" within the meaning of Section 409A of the
Code, then the commencement of the delivery of any such payments
will be delayed to the date that is six months after the
Termination Date.
f. The intent of this Section 4 is to make the Executive whole, to
the extent allowed under applicable laws and regulations, such
that he is not detrimentally impacted by the imposition of a tax
over and above the marginal rate applicable to his Keane-related
earnings as a result of a Change In Control. To the extent the
Executive is subject to income tax laws of a country other than
the United States, the Company shall use its best efforts to
implement the intent of this Section 4 in accordance with
applicable laws and regulations.
5. OBLIGATIONS AND RESTRICTIVE COVENANTS. All obligations and restrictive
covenants as set forth in any existing or future Employment
Agreements, Stock Option Agreements, or the like, shall remain in full
force and effect notwithstanding this Agreement, including but not
limited to, provisions and/or restrictions relating to trade secrets,
confidential information, works made for hire and inventions,
competition, solicitation, hiring, Company property, et cetera, EXCEPT
THAT any and all such obligations and restrictive covenants shall
remain in full force and effect for the entire Salary Continuation
Period notwithstanding any shorter period set forth therein.
6. NOTICES
a. Each notice, demand, consent or communication (hereinafter
"Notice") which is or may be required to be given by any party to
the other party in
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connection with this Agreement shall be in writing and given by
facsimile, personal delivery, receipted delivery services, or by
certified mail, return receipt requested, prepaid and properly
addressed to the other party as shown below.
b. Notices shall be effective on the date sent via facsimile, the
date delivered personally or by receipted delivery service, or
three (3) days after the date mailed:
(i) To the Company:
Legal Department
Attn: Corporate Counsel
Keane, Inc.
100 City Square
Charlestown, MA 02129
(ii) To the Executive:
At the residence address most recently filed with the
Company.
7. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests or obligations hereunder
without the prior written approval of the other Party; provided, that
Keane may assign its rights, interests or obligations hereunder to:
(a) a subsidiary, subdivision or affiliate, provided that Keane shall
remain responsible to the Executive for such obligations in the event
they are not met by such assignee; or (b) to a person, corporation,
organization or other entity that acquires (whether by stock purchase
or merger or otherwise) all or substantially all of the business or
assets of Keane.
8. MISCELLANEOUS.
a. This Agreement may be amended or modified only by a written
instrument executed by Keane and the Executive. Notwithstanding
anything herein to the contrary, to the extent that the Executive
or Keane reasonably believe that Section 409A of the Code will
result in adverse tax consequences to the Executive as a result
of this Agreement, then the Executive and Keane shall renegotiate
this Agreement in good faith in order to minimize or eliminate
such tax consequences and retain the basic economics of this
Agreement to the extent possible.
b. This Agreement shall be governed by and construed in accordance
with the internal laws (and not the laws of conflicts) of the
Commonwealth of Massachusetts.
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c. Except in the case of Section 7 above, the term "Keane" or the
"Company" shall include Keane, Inc. and any of its subsidiaries,
subdivisions and affiliates. The captions of the sections of this
Agreement are for convenience of reference only and in no way
define, limit or affect the scope or substance of any section of
this Agreement.
d. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together
shall constitute one and the same instrument.
e. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement. If any provision of this
Agreement shall be held invalid or unenforceable in part, the
remaining portion of such provision, together with all other
provisions of this Agreement, shall remain valid and enforceable
and continue in full force and effect to the fullest extent
consistent with law.
f. The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under,
this Agreement shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under
this Agreement.
g. Keane shall have the right to withhold all applicable income and
employment taxes due with respect to any payment made to the
Executive under this Agreement.
Executed this 12th day of March, 2005.
By: /s/ John J. Leahy
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John J. Leahy
Keane, Inc.
By: /s/ Laurence Shaw
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Laurence Shaw
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EXHIBIT A
DEFINITION OF "CHANGE IN CONTROL"
"Change in Control" shall mean any of the following:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Act")
(other than the Company, any of its subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any of its
subsidiaries), together with all "affiliates" and "associates"
(as such terms are defined in Rule 12b-2 under the Act) of such
person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or
more of either (A) the combined voting power of the Company's
then outstanding securities having the right to vote in an
election of the Company's Board ("Voting Securities") or (B) the
then outstanding shares of Company's common stock ("Common
Stock") (other than as a result of an acquisition of securities
directly from the Company); or
(b) During any period of two years or less, persons who at the
beginning of such period (the "Commencement Date") constitute the
Company's Board (the "Incumbent Directors") cease for any reason,
including, without limitation, as a result of a tender offer,
proxy contest, merger or similar transaction, to constitute at
least a majority of the Board, provided that any person becoming
a director of the Company subsequent to the Commencement Date
shall be considered an Incumbent Director if such person's
election was approved by or such person was nominated for
election by a vote of at least a majority of the Incumbent
Directors; but provided further, that any such person whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of members
of the Board or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the
Board, including by reason of agreement intended to avoid or
settle any such actual or threatened contest or solicitation,
shall not be considered an Incumbent Director; or
(c) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company where the stockholders of
the Company, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, shares representing in the
aggregate fifty percent (50%) or more of the voting shares of the
Company issuing cash or securities in the consolidation or merger
(or of its ultimate parent corporation, if any),
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(B) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged
by any party as a single plan) of all or substantially all of the
assets of the Company or (C) any plan or proposal for the
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have
occurred for purposes of the foregoing clause (a) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Common Stock or other Voting Securities outstanding, increases the
proportionate number of shares beneficially owned by any person to fifty percent
(50%) or more of either (A) the combined voting power of all of the then
outstanding Voting Securities or (B) Common Stock; provided, however, that if
any person referred to in this sentence shall thereafter become the beneficial
owner of any additional shares of Voting Securities or Common Stock (other than
pursuant to a stock split, stock dividend, or similar transaction or as a result
of an acquisition of securities directly from the Company) and immediately
thereafter beneficially owns fifty percent (50%) or more of either (A) the
combined voting power of all of the then outstanding Voting Securities or (B)
Common Stock, then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (a).