<PAGE> 1
FORM 10-Q
-------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------------
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
JULY 3, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
COMMISSION FILE NUMBER 1-5492-1
NASHUA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 02-0170100
(State of Incorporation) (IRS Employer Identification No.)
44 FRANKLIN STREET 03061-2002
NASHUA, NEW HAMPSHIRE (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (603) 880-2323
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
AS OF AUGUST 4, 1998, THE COMPANY HAD 6,745,303 SHARES OF COMMON STOCK,
EXCLUDING 24,094 SHARES IN TREASURY, PAR VALUE $1 PER SHARE, OUTSTANDING.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NASHUA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 3, 1998 December 31,
ASSETS: (Unaudited) 1997
- ------- ----------- ------------
<S> <C> <C>
Cash and cash equivalents $ 43,983 $ 3,736
Accounts receivable 17,934 14,915
Inventories
Materials and supplies 4,426 6,196
Work in process 1,894 3,650
Finished goods 7,504 4,791
--------- --------
13,824 14,637
Other current assets 12,795 12,362
Net current assets of discontinued operations -- 120
--------- --------
Total current assets 88,536 45,770
--------- --------
Plant and equipment 80,439 81,020
Accumulated depreciation (40,679) (40,605)
--------- --------
39,760 40,415
--------- --------
Intangible assets 2,005 2,010
Accumulated amortization (1,323) (1,081)
--------- --------
682 929
--------- --------
Investment in unconsolidated affiliate 4,448 7,524
Other assets 12,382 10,930
Net non-current assets of discontinued operations -- 41,194
--------- --------
Total assets $ 145,808 $146,762
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
- -------------------------------------
Current maturities of long-term debt $ 511 $ 511
Accounts payable 8,182 12,595
Accrued expenses 15,087 13,772
Income taxes payable 5,235 --
--------- --------
Total current liabilities 29,015 26,878
--------- --------
Long-term debt 1,277 3,489
Other long-term liabilities 20,880 21,373
--------- --------
Total long-term liabilities 22,157 24,862
--------- --------
Common stock and additional capital 20,459 18,845
Retained earnings 74,935 76,935
Treasury stock, at cost (758) (758)
--------- --------
Total shareholders' equity 94,636 95,022
--------- --------
Commitments and contingencies
Total liabilities and shareholders' equity $ 145,808 $146,762
========= ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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<PAGE> 3
<TABLE>
<CAPTION>
NASHUA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
(In thousands, except per share data) Three Months Ended Six Months Ended
------------------------ ----------------------
July 3, June 27, July 3, June 27,
1998 1997 1998 1997
------- -------- ------- -------
<S> <C> <C> <C> <C>
Net sales $40,081 $43,226 $84,567 $87,657
Cost of products sold 30,882 32,936 65,617 67,166
------- ------- ------- -------
Gross margin 9,199 10,290 18,950 20,491
Research, selling, distribution and
administrative expenses 10,452 12,018 20,944 23,582
Restructuring and other unusual items - 2,754 - 2,754
Equity in net (income) loss of Cerion Technologies 2,813 (3) 3,076 (28)
Interest expense 109 21 222 78
Interest income (669) (87) (677) (264)
------- ------- ------- -------
Loss from continuing operations before income
tax benefit (3,506) (4,413) (4,615) (5,631)
Income taxes (benefit) (1,245) (1,540) (1,711) (1,917)
------- ------- ------- -------
Loss from continuing operations (2,261) (2,873) (2,904) (3,714)
Income (loss) from discontinued operation, net of taxes - 932 (148) 380
Gain on disposal of discontinued operation, net of taxes 1,052 - 1,052 -
------- ------- ------- -------
Net loss (1,209) (1,941) (2,000) (3,334)
Retained earnings, beginning of period 76,144 84,364 76,935 85,757
------- ------- ------- -------
Retained earnings, end of period 74,935 82,423 74,935 82,423
======= ======= ======= =======
Earnings per share:
Income (loss) from continuing operations $ (.35) $ (.45) $ (.45) $ (.58)
Income (loss) from discontinued operation - .15 (.02) .06
Gain on disposal of discontinued operation .16 - .16 -
------- ------- ------- -------
Net loss per common share $ (.19) $ (.30) $ (.31) $ (.52)
======= ======= ======= =======
Average common shares 6,475 6,411 6,437 6,397
======= ======= ======= =======
Income (loss) per common share from
continuing operations assuming dilution $ (.35) $ (.45) $ (.45) $ (.58)
======= ======= ======= =======
Net income (loss) per common share assuming dilution $ (.19) $ (.30) $ (.31) $ (.52)
======= ======= ======= =======
Average common and potential common shares 6,475 6,411 6,437 6,397
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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<PAGE> 4
<TABLE>
<CAPTION>
NASHUA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
Six Months Ended
-----------------------
July 3, June 27,
1998 1997
------- --------
<S> <C> <C>
Cash flows from operating activities of continuing operations:
Net loss $(2,000) $ (3,334)
Adjustments to reconcile net loss to cash provided by
(used in) continuing operating activities:
Depreciation and amortization 3,473 5,471
Equity in net (income) loss of Cerion Technologies 3,076 (28)
Gain on sale of discontinued operation (1,052) --
Net change in working capital and other assets (9,881) (13,793)
------- --------
Cash used in continuing operating activities (6,384) (11,684)
------- --------
Cash flows from investing activities of continuing operations:
Investment in plant and equipment (3,042) (2,767)
Retirement of fixed assets -- (1,567)
------- --------
Cash used in investing activities of continuing operations (3,042) (4,334)
------- --------
Cash flows from financing activities of continuing operations:
Repayment of borrowings (2,212) (405)
Proceeds and tax benefits from shares issued under stock
option plans 1,614 157
------- --------
Cash used in financing activities of continuing operations (598) (248)
------- --------
Proceeds from the sale of discontinued operation 49,858 --
Cash provided by activities of discontinued operation 409 7,063
Effect of exchange rate changes on cash 4 (57)
------- --------
Increase (decrease) in cash and cash equivalents 40,247 (9,260)
Cash and cash equivalents at beginning of period 3,736 20,018
------- --------
Cash and cash equivalents at end of period $43,983 $ 10,758
======= ========
Interest paid $ 64 $ 127
======= ========
Income taxes paid $ 4,267 $ 2,408
======= ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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<PAGE> 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" for the Company's year ended December 31, 1997 financial
statements. As the Company has recorded net losses for the three and six month
periods ended July 3, 1998 and June 27, 1997, any common stock equivalents would
be antidilutive; therefore, Basic Earnings per Share and Diluted Earnings per
Share are equivalent under FAS 128.
COMMITMENTS AND CONTINGENCIES
In April 1994, Ricoh Company, Ltd. and Ricoh Corporation ("Ricoh") brought a
lawsuit in the United States District Court, District of New Hampshire
("District Court"), alleging the Company's infringement of the U.S. patents
4,611,730 and 4,878,603 relating to certain toner cartridges for Ricoh copiers.
In March 1997, the District Court decided to enjoin Nashua from manufacturing,
using or selling its NT-50 and NT-6750 toner cartridges. Sales of these products
in 1996 amounted to one percent of Nashua's total sales. The District Court left
the subject of damages, if any, to subsequent proceedings. The Company disagrees
with the District Court's decision and has appealed to the United States Court
of Appeals for the Federal Circuit ("Court of Appeals"). At the trial, Ricoh
alleged that its damages would be approximately $10 million as of the date of
the trial, and the Company alleged that such damages should be in the range of
$.1 million to $.4 million. Ricoh also is seeking treble damages and attorneys'
fees for willful infringement, but the Company believes an award for such
damages is unlikely. In June of 1998, the District Court appointed an expert
witness to provide expert testimony concerning the issue of damages. The Company
expects such expert testimony to be provided to the District Court during the
third quarter of 1998. Management believes that damages, if any, will not have a
material adverse effect on its consolidated financial position. The Company is
awaiting the District Court's decision on the issue of damages and the Court of
Appeal's decision in respect to the Company's appeal.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." The statement is effective for years beginning after
June 15, 1999. FAS 133 requires that all derivative instruments be recorded on
the balance sheet at their fair value. Changes in the fair value of derivatives
are recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. Management of the Company
anticipates that, due to its limited use of derivative instruments, the adoption
of FAS 133 will not have a significant effect on the Company's results of
operations or its financial position.
RECLASSIFICATION
Certain amounts from the prior year have been reclassified to conform to the
current year presentation.
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STOCK OPTIONS
At July 3, 1998, options for 682,570 shares of common stock were outstanding.
Stock options for an additional 119,523 shares may be awarded under the
Company's 1996 Stock Incentive Plan.
SHAREHOLDER'S EQUITY
On June 24, 1998, the Company's Board of Directors authorized the repurchase
from time to time in the open market of up to one million shares of its common
stock, subject to financial and market conditions, Securities and Exchange
Commission rules and regulations and financial covenant limitations with the
Company's lender.
On June 24, 1998, the Company's Board of Directors amended the Company's
Shareholder Rights Plan adopted in July 1996. The amendment increases from 10
percent to 20 percent the beneficial stock ownership and tender offer threshold
at which preferred stock purchase rights would detach from the Company's common
stock and become exercisable.
BUSINESS CHANGES
On April 9, 1998, the Company completed the sale of its Photofinishing Group.
The Company received net proceeds of $49.9 million for the net assets of the
businesses and after recording taxes of $7.9 million, recorded a gain of $1.1
million. For the first six months of 1998, the Photofinishing Group had revenues
of $22 million. The gain on the sale and the results of operations are reported
as a discontinued operation.
On April 6, 1998, the Company transferred certain assets and licensed certain
technology related to its United Kingdom-based Microsharp imaging technology.
The Company expects to realize a small gain from the transaction upon
satisfaction of promissory notes received as part of the transaction and due
December 31, 1998. The Company's United States-based projection screen
development, now called Nashua Projection Systems, is continuing the process of
qualifying its products for rear projection applications.
OTHER
These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position as of July 3,
1998, the results of operations for the three and six month periods ended July
3, 1998 and June 27, 1997 and cash flows for the six month period ended July 3,
1998.
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CORPORATE MATTERS
On April 9, 1998, the Company completed the sale of its Photofinishing Group.
The Company received net proceeds of $49.9 million for the net assets of the
businesses and after recording taxes of $7.9 million, recorded a gain of $1.1
million. For the first six months of 1998, the Photofinishing Group had revenues
of $22 million. The gain on the sale and the results of operations are reported
as a discontinued operation.
On April 6, 1998, the Company transferred certain assets and licensed certain
technology related to its United Kingdom-based Microsharp imaging technology.
The Company expects to realize a small gain from the transaction upon
satisfaction of promissory notes received as part of the transaction and due
December 31, 1998. The Company's United States-based projection screen
development, now called Nashua Projection Systems, is continuing the process of
qualifying its products for rear projection applications.
The Company recognized a pretax loss of $2.8 million in the second quarter of
1998 related to the investment in Cerion Technologies, Inc. ("Cerion"). The loss
from the investment in Cerion included $2.3 million resulting from Cerion's
writedown of certain long-lived assets and the establishment of a reserve for
amounts due from one customer. On August 11, 1998, Cerion issued a press release
stating that difficult market conditions persisted during the second quarter
within the disk drive industry highlighted by product oversupply and severe
pricing pressures and further stating that it believes industry uncertainty will
continue to affect its financial performance and order volume. In addition, on
August 13, 1998, Cerion announced that it is actively seeking a buyer for its
business, the outcome of which may also affect the future value of the Company's
investment in Cerion.
RESULTS OF OPERATIONS
Sales of $40.1 million for the second quarter of 1998 reflected a 7.3 percent
decrease from sales of $43.2 million in the second quarter of 1997. The sales
decline resulted primarily from lower toner and paper volumes in the Imaging
Supplies Division and to a lesser extent from lower prices in the Label
Division, partially offset by increased volume of thermal and dry gummed papers
in the Specialty Coated Products Division. The decline in gross margin from the
second quarter of 1997 to the current quarter is primarily the result of lower
prices in the Label Division resulting from competitive market pressures. Sales
of $84.6 million for the first six months of 1998 million were 3.5 percent lower
than sales of $87.7 million for the comparable period in 1997, primarily as a
result of lower toner and paper volume in the Imaging Supplies Division which
were partially offset by increased thermal paper volume in the Specialty Coated
Products Division. The volume declines in the Imaging Supplies Division for the
second quarter and first six months of 1998, when compared to the same periods
of 1997, were largely attributable to the impact of weak Asian markets on
several key customers and reduction of volume in the dealer agent channel caused
by the delay in introduction of new products.
In the second quarter of 1998, the Company reported a net loss from continuing
operations of $2.3 million compared to a net loss of $2.9 million in the second
quarter of 1997. Excluding the $2.8 million loss from the Company's investment
in Cerion recognized in the second quarter of 1998, and the $2.8 million
restructuring and other unusual charges recognized in the second quarter of
1997, pretax results improved by $.9 million in 1998 due to reduced expenses
related to the Company's development of its Projection System's screen
technology and increased interest income from the investment of cash generated
by the sale of the Photofinishing Group.
Research, selling, distribution and administrative expenses decreased 13.0
percent, or $1.6 million, for the second quarter of 1998 and 11.2 percent, or
$2.6 million, for the first six months of 1998 versus the comparable periods in
1997. Research expense decreased as the result of the elimination of projection
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<PAGE> 8
screen development expenses in the United Kingdom-based Microsharp imaging
operation on April 6, 1998 and a reduced workforce. The decrease in selling and
distribution expense resulted from lower sales, partially offset by higher
freight rates. Reduced administrative costs are largely attributable to the
restructuring activities completed during the past twelve months.
Net restructuring and other unusual charges of $4.3 million were recorded in the
full year of 1997 related to the sale of excess real estate in Nashua, NH and
other business unit and functional realignments. Details of the charges related
to continuing operations and the activity recorded during the second quarter of
1998 follows:
<TABLE>
<CAPTION>
Balance Current Balance
April 3, Period July 3,
(In thousands) 1998 Charges 1998
-------- ------- -------
<S> <C> <C> <C>
Provisions for severance related to workforce reductions $1,239 $356 $ 883
Provisions for assets to be sold or discarded 576 228 348
Other 247 66 181
------ ----- ------
Total $2,062 $650 $1,412
====== ==== ======
</TABLE>
All charges, excluding asset writedowns, are principally cash in nature and are
expected to be funded from operations or current cash balances.
The estimated annual effective income tax benefit of 37 percent for the first
six months of 1998 is higher than the U.S. statutory rate principally due to the
deductibility of state income taxes.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Working capital increased $40.6 million from December 31, 1997, primarily from
net proceeds generated by the sale of the Photofinishing Group. The Company
expects that a portion of the proceeds will be reinvested in its continuing
businesses. In addition, on June 24, 1998, the Company's Board of Directors
authorized the repurchase from time to time in the open market of up to one
million shares of its common stock, subject to financial and market conditions,
Securities and Exchange Commission rules and regulations and financial covenant
limitations with the Company's lender.
OTHER MATTERS
The Company is in the process of addressing the Year 2000 compliance issues for
both information and non information technology systems including third parties
with whom the Company has a material relationship. The Company expects to
complete the necessary conversions and implementations by the end of the second
quarter of 1999. Testing of conversions already completed began in the second
quarter of 1998 and will continue as each material system is completed
throughout 1998 and 1999. The Company has made and expects to continue to make
substantial progress towards Year 2000 compliance during 1998 and therefore has
not developed a contingency plan. The Company does not expect the costs of
attaining Year 2000 compliance or the risks of not attaining full compliance to
be material to the Company's business, operations or financial condition.
On June 24, 1998, the Company's Board of Directors amended the Company's
Shareholder Rights Plan adopted in July 1996. The amendment increases from 10
percent to 20 percent the beneficial stock ownership and tender offer threshold
at which preferred stock purchase rights would detach from the Company's common
stock and become exercisable.
-8-
<PAGE> 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In August and September 1996, two individual plaintiffs initiated lawsuits in
the Circuit Court of Cook County, Illinois against the Company, Cerion, certain
directors and officers of Cerion, and the Company's underwriter, on behalf of
classes consisting of all persons who purchased the common stock of Cerion
between May 24, 1996 and July 9, 1996. These two complaints were consolidated.
In March 1997, the same individual plaintiffs joined by a third plaintiff filed
a Consolidated Amended Class Action Complaint (the "Consolidated Complaint").
The Consolidated Complaint alleged that, in connection with Cerion's
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<PAGE> 10
initial public offering, the defendants issued materially false and misleading
statements and omitted the disclosure of material facts regarding, in
particular, certain significant customer relationships. In October 1997, the
Court, on motion by the defendants, dismissed the Consolidated Complaint. The
plaintiffs filed a Second Amended Consolidated Complaint alleging substantially
similar claims as the Consolidated Complaint seeking damages and injunctive
relief. On May 6, 1998, the Court, on motion by the defendants, dismissed with
prejudice the Second Amended Consolidated Complaint. The plaintiffs have filed a
notice of appeal of the Court's ruling. The Company continues to believe that
this lawsuit is without merit and plans to vigorously defend itself in this
matter on appeal.
In April 1994, Ricoh Company, Ltd. and Ricoh Corporation ("Ricoh") brought a
lawsuit in the United States District Court, District of New Hampshire
("District Court"), alleging the Company's infringement of the U.S. patents
4,611,730 and 4,878,603 relating to certain toner cartridges for Ricoh copiers.
In March 1997, the District Court decided to enjoin Nashua from manufacturing,
using or selling its NT-50 and NT-6750 toner cartridges. Sales of these products
in 1996 amounted to one percent of Nashua's total sales. The District Court left
the subject of damages, if any, to subsequent proceedings. The Company disagrees
with the District Court's decision and has appealed to the United States Court
of Appeals for the Federal Circuit ("Court of Appeals"). At the trial, Ricoh
alleged that its damages would be approximately $10 million as of the date of
the trial, and the Company alleged that such damages should be in the range of
$.1 million to $.4 million. Ricoh also is seeking treble damages and attorneys'
fees for willful infringement, but the Company believes an award for such
damages is unlikely. In June of 1998, the District Court appointed an expert
witness to provide expert testimony concerning the issue of damages. The Company
expects such expert testimony to be provided to the District Court during the
third quarter of 1998. Management believes that damages, if any, will not have a
material adverse effect on its consolidated financial position. The Company is
awaiting the District Court's decision on the issue of damages and the Court of
Appeal's decision in respect to the Company's appeal.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
For matters submitted to a vote of security holders, see the Company's Proxy
Statement dated March 25, 1998 issued in connection with the Annual Meeting of
Stockholders held on April 24, 1998, which is incorporated herein by reference.
At such meeting, the stockholders acted as follows:
PROPOSAL 1:
To elect a Board of Directors for the ensuing year.
<TABLE>
<CAPTION>
Number of Votes
---------------------------------
Nominees For Withheld
-------- --- --------
<S> <C> <C>
Sheldon A. Buckler 5,926,297 184,631
Gerald G. Garbacz 5,923,594 187,334
Charles S. Hoppin 5,925,144 185,784
John M. Kucharski 5,926,561 184,367
David C. Miller, Jr. 5,928,235 182,693
Peter J. Murphy 5,927,935 182,993
James F. Orr III 5,926,502 184,426
</TABLE>
The above named individuals were elected Directors of the Company.
PROPOSAL 2:
Stockholder proposal requesting the Board of Directors to redeem the Company's
Shareholder Rights Plan adopted in July 1996.
<TABLE>
<CAPTION>
Number of Votes
---------------
Broker
For Against Abstain Non-Vote
--- ------- ------- --------
<S> <C> <C> <C>
3,256,630 1,817,223 75,439 961,636
</TABLE>
The proposal was approved by the affirmative vote of the majority of the shares
of common stock entitled to vote at the annual meeting.
ITEM 5. OTHER INFORMATION
STOCKHOLDER PROPOSALS
Any proposal that a stockholder wishes the Company to consider for inclusion in
the proxy statement and form of proxy card for the Company's 1999 Annual Meeting
of Stockholders (the "1999 Meeting") must be received by the Company on or
before November 25, 1998. Such proposals should be directed to Nashua
Corporation, 44 Franklin Street, P.O. Box 2002, Nashua, New Hampshire
03061-2002, Attention: Secretary.
In addition, the Company's By-Laws require all stockholder proposals to be
timely submitted in advance to the Secretary of the Company at the above address
(other than proposals submitted for inclusion in the proxy statement and form of
proxy as described above). To be timely, the Secretary must receive such notice
not less than 60 days nor more than 90 days prior to the 1999 Meeting; provided
that, if less than 70 days notice or prior public disclosure of the date of the
1999 Meeting is given or made, the notice must be received not later than the
close of business on the 10th day following the date on which such notice of the
date of the meeting was mailed or such public disclosure was made, whichever
occurs first.
FACTORS WHICH MAY AFFECT FUTURE RESULTS
This report may contain forward-looking statements as that term is defined in
the Private Securities Litigation Reform Act of 1995. When used in this report,
the words "believe," "expects," "to be" and similar expressions are intended to
identify such forward-looking statements. Any such forward-looking statements
and the Company's future results of operations and financial condition are
subject to risks and
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<PAGE> 11
uncertainties which could cause actual results to differ materially from those
anticipated and from past results. Such risks and uncertainties include, but are
not limited to, the Company's future capital needs, stock market conditions,
price of the Company's stock, fluctuations in customer demand, intensity of
competition from other vendors, timing and acceptance of new product
introductions, general economic and industry conditions, delays or difficulties
in programs designed to increase sales and return the Company to profitability,
the possibility of a final award of material damages in the patent litigation
brought against the Company by Ricoh Company, Ltd. and the Cerion securities
litigation and other risks detailed in the Company's filings with the Securities
and Exchange Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.01 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Gerald G. Garbacz.
10.02 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and John L. Patenaude.
10.03 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Bruce T. Wright.
10.04 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Joseph R. Matson.
10.05 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Eugene P. Pache.
10.06 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Peter C. Anastos.
10.07 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Joseph I. Gonzalez-Rivas.
10.08 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and John J. Ireland.
22.01 The Company's Proxy Statement dated March 25, 1998 for the
Annual Meeting of Stockholders held on April 24, 1998 filed with
the SEC on March 25, 1998 and herein incorporated by reference.
27.01 Financial Data Schedule for the period ended July 3, 1998.
27.02 Restated Financial Data Schedule for the period ended June 27,
1998.
(b) Reports on Form 8-K
On May 18, 1998, the Company filed a Form 8-K to announce the realignment
of the Company's senior management team.
On July 2, 1998, the Company filed a Form 8-K to revise its Shareholder
Rights Plan and to authorize a new stock repurchase program.
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<PAGE> 12
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NASHUA CORPORATION
------------------------------------
(Registrant)
Date: August 14, 1998 By: /s/ John L. Patenaude
------------------ ------------------------------------
John L. Patenaude
Vice President-Finance,
Chief Financial Officer and Treasurer
(principal financial and duly authorized officer)
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<PAGE> 13
EXHIBIT INDEX
Exhibits Description
-------- -----------
10.01 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Gerald G. Garbacz.
10.02 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and John L. Patenaude.
10.03 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Bruce T. Wright.
10.04 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Joseph R. Matson.
10.05 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Eugene P. Pache.
10.06 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Peter C. Anastos.
10.07 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and Joseph I. Gonzalez-Rivas.
10.08 Change of Control and Severance Agreement dated as of June 24,
1998 between the Company and John J. Ireland.
22.01 The Company's Proxy Statement dated March 25, 1998 for the
Annual Meeting of Stockholders held on April 24, 1998 filed with
the SEC on March 25, 1998 and herein incorporated by reference.
27.01 Financial Data Schedule for the period ended July 3, 1998.
27.02 Restated Financial Data Schedule for the period ended June 27,
1998.
<PAGE> 1
EXHIBIT 10.01
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
AGREEMENT by and between NASHUA CORPORATION, a Delaware corporation (the
"Company") and GERALD G. GARBACZ (the "Executive"), dated as of the 24th day of
June, 1998.
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company; and
WHEREAS, in order to accomplish these objectives, the Board believes it is in
the best interests of the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is
terminated or the Executive ceases to be an officer of the Company
prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated that such termination of employment (1) was at
the request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (2) otherwise arose in connection
with or anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof is hereinafter referred to as the "Renewal Date"),
the Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so extended.
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of l934, as amended (the "Exchange Act"))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) (a "Person") of 30% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Company Voting
Securities"), PROVIDED, HOWEVER, that any acquisition by (x) the
Company or any of its subsidiaries, or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which, following
such acquisition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, shall not constitute a
Change of Control; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with
respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from Business Combination in
substantially the same proportion as their ownership immediately prior
to such Business Combination of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or of (ii)
sale or other disposition of all or substantially all of the assets of
the Company other than to a corporation with respect to which,
following such sale or disposition, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals
and
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entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common
Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location
where the Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles
from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the
Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards
or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that
to the extent that any such activities have been conducted by
the Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the
Company.
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(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times
the highest monthly base salary paid or payable to the
Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the
month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed at least
annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in
base salary awarded in the ordinary course of business to other
peer executives of the Company and its affiliated companies.
Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any
such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" includes any company controlled by, controlling or
under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year beginning or ending
during the Employment Period, an annual bonus (the "Annual
Bonus") in cash at least equal to the average bonus paid or
payable, including by reason of deferral, to the Executive by
the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in
which the Effective Date occurs (annualized for any fiscal year
during the Employment Period consisting of less than twelve
full months or with respect to which the Executive has been
employed by the Company for less than twelve full months) (the
"Recent Annual Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt
of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to Annual
Base Salary and Annual Bonus payable as hereinabove provided,
the Executive shall be entitled to participate during the
Employment Period in all incentive, savings and retirement
plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices,
policies and programs provide the Executive with incentive,
savings and retirement benefit opportunities, in each case,
less favorable, in the aggregate, than (x) the most favorable
of those provided by the Company and its affiliated companies
for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period
immediately preceding the Effective Date or (y) if more
favorable to the Executive, those provided at any time after
the Effective Date to other peer executives of the Company and
its affiliated companies.
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(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally applicable to other peer
executives of the Company and its affiliated companies, but in
no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable,
in the aggregate, than (x) the most favorable of such plans,
practices, policies and programs in effect for the Executive at
any time during the 90-day period immediately preceding the
Effective Date or (y) if more favorable to the Executive, those
provided at any time after the Effective Date generally to
other peer executives of the Company and its affiliated
companies.
(v) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any
time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the
most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the
Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to
the most favorable of the foregoing provided to the Executive
by the Company and its affiliated companies at any time during
the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as provided generally at
any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer incentives of the Company
and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
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(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 15(b) of this
Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or Executive's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
(b) CAUSE. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause"
means (i) an action taken by the Executive involving willful and
wanton malfeasance involving specifically a wholly wrongful and
unlawful act, or (ii) the Executive being convicted of a felony.
(c) GOOD REASON. The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in
a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy Section
14(c) of this Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made
by the Executive shall be conclusive.
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(d) NOTICE OF TERMINATION. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
15(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the
extent applicable sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than fifteen days after the giving of such notice).
In the case of a termination of the Executive's employment for Cause,
a Notice of Termination shall include 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 the Executive and
reasonable opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board prior to such vote),
finding that in the good faith opinion of the Board the Executive was
guilty of conduct constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a Notice
of Termination. The failure by the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing the Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (ii) if the
Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following
obligations: (i) payment of the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (ii)
payment of the product of (x) the greater of (A) the Annual Bonus paid
or payable, including by reason of deferral, (and annualized for any
fiscal year consisting of less than twelve full months or for which
the Executive has been employed for less than twelve full months) for
the most recently completed fiscal year during the Employment Period,
if any, and (B) the Recent Annual Bonus (such greater amount hereafter
referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365
and (iii) payment of any compensation previously deferred by the
Executive (together with any accrued interest thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the amounts described in paragraphs (i), (ii) and (iii) are
hereafter referred to as "Accrued Obligations"). All Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive's estate or designated
beneficiaries shall be entitled to receive the Executive's Annual Base
Salary for the balance of the Employment Period; PROVIDED, HOWEVER,
that such payments of Annual Base Salary shall be reduced by any
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survivor benefits paid to the Executive's estate or designated
beneficiary under the Retirement Plan. Anything in this Agreement to
the contrary notwithstanding, the Executive's estate and family shall
be entitled to receive benefits at least equal to the most favorable
benefits provided generally by the Company and any of its affiliated
companies to the estates and surviving families of peer executives of
the Company and such affiliated companies under such plans, programs,
practices and policies relating to death benefits, if any, as in
effect generally with respect to other peer executives and their
estates and families at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death generally with respect to other peer executives of
the Company and its affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations. All Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination. In addition, the Executive shall be entitled
to receive the Executive's Annual Base Salary for the balance of the
Employment Period; PROVIDED, HOWEVER, that such payments of Annual
Base Salary shall be reduced by any benefits paid to the Executive
under the Retirement Plan by reason of Disability. Anything in this
Agreement to the contrary notwithstanding, the Executive shall be
entitled after the Disability Effective Date to receive disability and
other benefits at least equal to the most favorable of those generally
provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their
families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive Annual Base Salary through
the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore
unpaid. If the Executive terminates employment during the Employment
Period other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during the
Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability, or the Executive shall
terminate employment during the Employment Period for Good Reason, the
Company shall pay to the Executive in a lump sum in cash within 60
days after the Date of Termination, and subject to receiving an
executed irrevocable Release as described in Section 11, the aggregate
of the following amounts:
A. all Accrued Obligations; and
B. the product of (x) three and (y) the sum of (i) Annual Base
Salary and (ii) the Highest Annual Bonus; and
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C. a lump-sum retirement benefit equal to the difference between
(a) the actuarial equivalent of the benefit under the Nashua
Corporation Retirement Plan for Salaried Employees (the
"Retirement Plan") and any supplemental and/or excess
retirement plan providing benefits for the Executive (the
"SERP") which the Executive would receive if the Executive's
employment continued at the compensation level provided for in
Sections 4(b)(i) and 4(b)(ii) of this Agreement for the
remainder of the Employment Period, assuming for this purpose
that all accrued benefits are fully vested, and (b) the
actuarial equivalent of the Executive's actual benefit (paid or
payable), if any, under the Retirement Plan and the SERP; for
purposes of determining the amount payable pursuant to this
Section 6(d)(i)C the accrual formulas and actuarial assumptions
utilized shall be no less favorable than those in effect with
respect to the Retirement Plan and the SERP during the 90-day
period immediately prior to the Effective Date.
In addition, for the remainder of the Employment Period (if the
termination took place during the Employment Period under this Section
6), the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer
executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their
families. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed
until the end of the Employment Period and to have retired on the last
day of such period.
Notwithstanding the foregoing, if a Change of Control shall have
occurred before the Date of Termination, the aggregate amount of
"parachute payments", as defined in Section 280G of the Internal
Revenue Code of 1986, as amended from time to time (the "Code")
payable to the Executive pursuant to all arrangements with the Company
shall not exceed one dollar less than three times the Executive's
"base amount", as defined in Section 280G of the Code (the "cut back
amount"); provided, however, that if Executive would be better off by
at least $25,000 on an after-tax basis by receiving the full amount of
the parachute payments as opposed to the cut back amount
(notwithstanding a 20% excise tax) the Executive shall receive the
full amount of the parachute payments.
7. SEVERANCE BENEFITS. Notwithstanding anything contained in this Agreement to
the contrary, if, before or after the Employment Period, the Executive's
employment is terminated by the Company for reason other than misconduct,
the Company shall pay to the Executive one year's salary continuation and
continue medical and dental benefits during such continuation period.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any other agreements with the Company or any
of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program except as
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explicitly modified by this Agreement.
9. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof, plus
in each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Internal Revenue Code of l986, as amended (the
"Code").
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces the Retention Agreement between the parties dated as of the 24th
day of October, 1997 and any and all other agreements, policies,
understandings or letters (including but not limited to employment
agreements, severance agreements and job abolishment policies) between the
parties related to the subject matter hereof.
11. RELEASE. Prior to receipt of the payment described in Sections 6(d) or 7,
the Executive shall execute and deliver a Release to the Company as
follows:
The Executive hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Company, its officers, directors,
stockholders, corporate affiliates, agents and employees from any and
all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings,
covenants, contracts, agreements, promises, doings, omissions,
damages, executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which he ever had
or now has against the Company, its officers, directors, stockholders,
corporate affiliates, agents and employees, including, but not limited
to, all claims arising out of his employment, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964,
42 U.S.C. ss.2000e ET SEQ., the Age Discrimination in Employment Act,
29 U.S.C., ss.621 ET SEQ., the Americans With Disabilities Act, 42
U.S.C., ss.12101 ET SEQ., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. ss.354-A:1 ET SEQ. and similar
state antidiscrimination laws, damages arising out of all employment
discrimination claims, wrongful discharge claims or other common law
claims and damages, provided, however, that nothing herein shall
release the Company from Executive's Stock Option Agreements or
Restricted Stock Agreements. The Release shall also contain, at a
minimum, the following language:
The Executive acknowledges that he has been given twenty-one
(21) days to consider the terms of this Release and that the
Company advised him to consult with an attorney of his own
choosing prior to signing this Release. The Executive may
revoke this Release for a period of seven (7) days after the
execution of the Release and the Release shall not be effective
or enforceable until the expiration of this seven (7) day
revocation period.
At the same time, the Company shall execute and deliver a Release to the
Executive as follows:
The Company hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Executive from any and all claims
which it ever had or now has against the Executive, other than for
intentional harmful acts.
<PAGE> 11
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12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior
written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section 12 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
13. ARBITRATION. Any controversy or claim arising out of this Agreement shall
be settled by binding arbitration in accordance with the commercial rules,
policies and procedures of the American Arbitration Association. Judgment
upon any award rendered by the arbitrator may be entered in any court of
law having jurisdiction thereof. Arbitration shall take place in Nashua,
New Hampshire at a mutually convenient location.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
<PAGE> 12
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(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Executive:
-------------------
Gerald G. Garbacz
26 The Flume
Amherst, NH 03031
If to the Company:
------------------
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03060
Attention: General Counsel
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof or the failure to assert any right the Executive may
have hereunder, including, without limitation, the right to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v), shall not
be deemed to be a waiver of such provision or right or any other
provision or right thereof.
(f) This Agreement contains the entire understanding of the Company and
the Executive with
<PAGE> 13
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respect to the subject matter hereof. The Executive and the Company
acknowledge that the employment of the Executive by the Company is "at
will" and, prior to the Effective Date, both the Executive's
employment and this Agreement may be terminated by either the Company
or the Executive at any time. In the event that this Agreement is
terminated by the Company prior to the Effective Date and the
Executive remains employed by the Company, the Executive would be
entitled to the same severance benefits as set forth in Section 7 of
this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NASHUA CORPORATION EXECUTIVE
By /s/ Peter C. Anastos /s/ Gerald G. Garbacz
----------------------------------- ----------------------------
Vice President, General Counsel and Name: Gerald G. Garbacz
Secretary
<PAGE> 1
EXHIBIT 10.02
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
AGREEMENT by and between NASHUA CORPORATION, a Delaware corporation (the
"Company") and JOHN L. PATENAUDE (the "Executive"), dated as of the 24th day of
June, 1998.
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company; and
WHEREAS, in order to accomplish these objectives, the Board believes it is in
the best interests of the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date during the
"Change of Control Period" (as defined in Section 1(b)) on
which a Change of Control occurs. Anything in this Agreement
to the contrary notwithstanding, if the Executive's employment
with the Company is terminated or the Executive ceases to be
an officer of the Company prior to the date on which a Change
of Control occurs, and it is reasonably demonstrated that such
termination of employment (1) was at the request of a third
party who has taken steps reasonably calculated to effect the
Change of Control or (2) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of
employment.
(b) The "Change of Control Period" is the period commencing on the
date hereof and ending on the third anniversary of such date;
provided, however, that commencing on the date one year after
the date hereof, and on each annual anniversary of such date
(such date and each annual anniversary thereof is hereinafter
referred to as the "Renewal Date"), the Change of Control
Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so
extended.
<PAGE> 2
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of l934,
as amended (the "Exchange Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) (a "Person") of 30% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), PROVIDED,
HOWEVER, that any acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which,
following such acquisition, more than 60% of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the
Outstanding Company Common Stock and Company Voting
Securities, as the case may be, shall not constitute a Change
of Control; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any individual
becoming a director subsequent to the date hereof whose
election or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business
Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such
Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from Business Combination in
substantially the same proportion as their ownership
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting
Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or of
(ii) sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with
respect to which, following such sale or disposition, more
than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals
and
<PAGE> 3
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entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially
the same proportion as their ownership of the Outstanding
Company Common Stock and Company Voting Securities, as the
case may be, immediately prior to such sale or disposition.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ
of the Company, for the period commencing on the Effective Date and
ending on the third anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in
all material respects with the most significant of
those held, exercised and assigned at any time during
the 90-day period immediately preceding the Effective
Date and (B) the Executive's services shall be
performed at the location where the Executive was
employed immediately preceding the Effective Date or
any office or location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business
hours to the business and affairs of the Company and,
to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder,
to use the Executive's reasonable best efforts to
perform faithfully and efficiently such
responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal
investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent
that any such activities have been conducted by the
Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of
activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter
be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
<PAGE> 4
-4-
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid at a
monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable to the
Executive by the Company and its affiliated companies
in respect of the twelve-month period immediately
preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base
Salary shall be reviewed at least annually and shall
be increased at any time and from time to time as
shall be substantially consistent with increases in
base salary awarded in the ordinary course of
business to other peer executives of the Company and
its affiliated companies. Any increase in Annual Base
Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any
such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement,
the term "affiliated companies" includes any company
controlled by, controlling or under common control
with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year
beginning or ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least
equal to the average bonus paid or payable, including
by reason of deferral, to the Executive by the
Company and its affiliated companies in respect of
the three fiscal years immediately preceding the
fiscal year in which the Effective Date occurs
(annualized for any fiscal year during the Employment
Period consisting of less than twelve full months or
with respect to which the Executive has been employed
by the Company for less than twelve full months) (the
"Recent Annual Bonus"). Each such Annual Bonus shall
be paid no later than the end of the third month of
the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such
Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition
to Annual Base Salary and Annual Bonus payable as
hereinabove provided, the Executive shall be entitled
to participate during the Employment Period in all
incentive, savings and retirement plans, practices,
policies and programs applicable generally to other
peer executives of the Company and its affiliated
companies, but in no event shall such plans,
practices, policies and programs provide the
Executive with incentive, savings and retirement
benefit opportunities, in each case, less favorable,
in the aggregate, than (x) the most favorable of
those provided by the Company and its affiliated
companies for the Executive under such plans,
practices, policies and programs as in effect at any
time during the 90-day period immediately preceding
the Effective Date or (y) if more favorable to the
Executive, those provided at any time after the
Effective Date to other peer executives of the
Company and its affiliated companies.
<PAGE> 5
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(iv) WELFARE BENEFIT PLANS. During the Employment Period,
the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by
the Company and its affiliated companies (including,
without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group
life, accidental death and travel accident insurance
plans and programs) to the extent generally
applicable to other peer executives of the Company
and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide
the Executive with benefits which are less favorable,
in the aggregate, than (x) the most favorable of such
plans, practices, policies and programs in effect for
the Executive at any time during the 90-day period
immediately preceding the Effective Date or (y) if
more favorable to the Executive, those provided at
any time after the Effective Date generally to other
peer executives of the Company and its affiliated
companies.
(v) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in
accordance with the most favorable policies,
practices and procedures of the Company and its
affiliated companies in effect for the Executive at
any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits in
accordance with the most favorable plans, practices,
programs and policies of the Company and its
affiliated companies in effect for the Executive at
any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office
or offices of a size and with furnishings and othe
appointments, and to exclusive personal secretarial
and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive
by the Company and its affiliated companies at any
time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the
Executive, as provided generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and
practices of the Company and its affiliated companies
as in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer
incentives of the Company and its affiliated
companies.
5. TERMINATION OF EMPLOYMENT.
<PAGE> 6
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(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice
in accordance with Section 15(b) of this Agreement of its
intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of
the Executive's duties. For purposes of this Agreement,
"Disability" means the absence of the Executive from the
Executive's duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or Executive's legal
representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this
Agreement, "Cause" means (i) an action taken by the Executive
involving willful and wanton malfeasance involving
specifically a wholly wrongful and unlawful act, or (ii) the
Executive being convicted of a felony.
(c) GOOD REASON. The Executive's employment may be terminated
during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of
this Agreement, or any other action by the Company
which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other
than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than that described in
Section 4(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 14(c) of this Agreement.
For purposes of this Agreement, any good faith determination of Good
Reason made by the Executive shall be conclusive.
<PAGE> 7
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(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party
hereto given in accordance with Section 15(b) of this
Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon,
(ii) to the extent applicable sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision
so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). In the
case of a termination of the Executive's employment for Cause,
a Notice of Termination shall include 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 the Executive and reasonable opportunity for the
Executive, together with the Executive's counsel, to be heard
before the Board prior to such vote), finding that in the good
faith opinion of the Board the Executive was guilty of conduct
constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a
Notice of Termination. The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive
any right of the Executive hereunder or preclude the Executive
from asserting such fact or circumstance in enforcing the
Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that
(i) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination
shall be the date on which the Company notifies the Executive
of such termination and (ii) if the Executive's employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other
than the following obligations: (i) payment of the Executive's
Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (ii) payment of the product of
(x) the greater of (A) the Annual Bonus paid or payable,
including by reason of deferral, (and annualized for any
fiscal year consisting of less than twelve full months or for
which the Executive has been employed for less than twelve
full months) for the most recently completed fiscal year
during the Employment Period, if any, and (B) the Recent
Annual Bonus (such greater amount hereafter referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365
and (iii) payment of any compensation previously deferred by
the Executive (together with any accrued interest thereon) and
not yet paid by the Company and any accrued vacation pay not
yet paid by the Company (the amounts described in paragraphs
(i), (ii) and (iii) are hereafter referred to as "Accrued
Obligations"). All Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. In
addition, the Executive's estate or designated beneficiaries
shall be entitled to receive the Executive's Annual Base
Salary for the balance of the Employment Period; PROVIDED,
HOWEVER, that such payments of Annual Base Salary shall be
reduced by any
<PAGE> 8
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survivor benefits paid to the Executive's estate or designated
beneficiary under the Retirement Plan. Anything in this
Agreement to the contrary notwithstanding, the Executive's
estate and family shall be entitled to receive benefits at
least equal to the most favorable benefits provided generally
by the Company and any of its affiliated companies to the
estates and surviving families of peer executives of the
Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits,
if any, as in effect generally with respect to other peer
executives and their estates and families at any time during
the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's
family, as in effect on the date of the Executive's death
generally with respect to other peer executives of the Company
and its affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued
Obligations. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive shall be entitled to
receive the Executive's Annual Base Salary for the balance of
the Employment Period; PROVIDED, HOWEVER, that such payments
of Annual Base Salary shall be reduced by any benefits paid to
the Executive under the Retirement Plan by reason of
Disability. Anything in this Agreement to the contrary
notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other
benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies
to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to
other peer executives and their families at any time during
the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with
respect to other peer executives of the Company and its
affiliated companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay
to the Executive Annual Base Salary through the Date of
Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment
during the Employment Period other than for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations. In such case,
all Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during
the Employment Period, the Company shall terminate the
Executive's employment other than for Cause or Disability, or
the Executive shall terminate employment during the Employment
Period for Good Reason, the Company shall pay to the Executive
in a lump sum in cash within 60 days after the Date of
Termination, and subject to receiving an executed irrevocable
Release as described in Section 11, the aggregate of the
following amounts:
A. all Accrued Obligations; and
B. the product of (x) three and (y) the sum of (i)
Annual Base Salary and (ii) the Highest Annual Bonus;
and
<PAGE> 9
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C. a lump-sum retirement benefit equal to the difference
between (a) the actuarial equivalent of the benefit
under the Nashua Corporation Retirement Plan for
Salaried Employees (the "Retirement Plan") and any
supplemental and/or excess retirement plan providing
benefits for the Executive (the "SERP") which the
Executive would receive if the Executive's employment
continued at the compensation level provided for in
Sections 4(b)(i) and 4(b)(ii) of this Agreement for
the remainder of the Employment Period, assuming for
this purpose that all accrued benefits are fully
vested, and (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any,
under the Retirement Plan and the SERP; for purposes
of determining the amount payable pursuant to this
Section 6(d)(i)C the accrual formulas and actuarial
assumptions utilized shall be no less favorable than
those in effect with respect to the Retirement Plan
and the SERP during the 90-day period immediately
prior to the Effective Date.
In addition, for the remainder of the Employment Period (if
the termination took place during the Employment Period under
this Section 6), the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance
with the plans, programs, practices and policies described in
Section 4(b)(iv) of this Agreement if the Executive's
employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the
Company and its affiliated companies applicable generally to
other peer executives and their families during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the
Company and its affiliated companies and their families. For
purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and
to have retired on the last day of such period.
Notwithstanding the foregoing, if a Change of Control shall
have occurred before the Date of Termination, the aggregate
amount of "parachute payments", as defined in Section 280G of
the Internal Revenue Code of 1986, as amended from time to
time (the "Code") payable to the Executive pursuant to all
arrangements with the Company shall not exceed one dollar less
than three times the Executive's "base amount", as defined in
Section 280G of the Code (the "cut back amount"); provided,
however, that if Executive would be better off by at least
$25,000 on an after-tax basis by receiving the full amount of
the parachute payments as opposed to the cut back amount
(notwithstanding a 20% excise tax) the Executive shall receive
the full amount of the parachute payments.
7. SEVERANCE BENEFITS. Notwithstanding anything contained in this
Agreement to the contrary, if, before or after the Employment Period,
the Executive's employment is terminated by the Company for reason
other than misconduct, the Company shall pay to the Executive one
year's salary continuation and continue medical and dental benefits
during such continuation period.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or
practices, provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program except as
<PAGE> 10
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explicitly modified by this Agreement.
9. FULL SETTLEMENT. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company
may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement. The Company agrees to
pay, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof,
plus in each case interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Internal Revenue Code of l986, as amended
(the "Code").
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces the Retention Agreement between the parties dated as of the
24th day of October, 1997 and any and all other agreements, policies,
understandings or letters (including but not limited to employment
agreements, severance agreements and job abolishment policies) between
the parties related to the subject matter hereof.
11. RELEASE. Prior to receipt of the payment described in Sections 6(d) or
7, the Executive shall execute and deliver a Release to the Company as
follows:
The Executive hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company,
its officers, directors, stockholders, corporate affiliates,
agents and employees from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights,
debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages,
executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which he
ever had or now has against the Company, its officers,
directors, stockholders, corporate affiliates, agents and
employees, including, but not limited to, all claims arising
out of his employment, all employment discrimination claims
under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
ss.2000e ET SEQ., the Age Discrimination in Employment Act, 29
U.S.C., ss.621 ET SEQ., the Americans With Disabilities Act,
42 U.S.C., ss.12101 ET SEQ., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. ss.354-A:1 ET SEQ. and
similar state antidiscrimination laws, damages arising out of
all employment discrimination claims, wrongful discharge
claims or other common law claims and damages, provided,
however, that nothing herein shall release the Company from
Executive's Stock Option Agreements or Restricted Stock
Agreements. The Release shall also contain, at a minimum, the
following language:
The Executive acknowledges that he has been given
twenty-one (21) days to consider the terms of this
Release and that the Company advised him to consult
with an attorney of his own choosing prior to signing
this Release. The Executive may revoke this Release
for a period of seven (7) days after the execution of
the Release and the Release shall not be effective or
enforceable until the expiration of this seven (7)
day revocation period.
At the same time, the Company shall execute and deliver a Release to
the Executive as follows:
The Company hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Executive
from any and all claims which it ever had or now has against
the Executive, other than for intentional harmful acts.
<PAGE> 11
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12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 12
constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
13. ARBITRATION. Any controversy or claim arising out of this Agreement
shall be settled by binding arbitration in accordance with the
commercial rules, policies and procedures of the American Arbitration
Association. Judgment upon any award rendered by the arbitrator may be
entered in any court of law having jurisdiction thereof. Arbitration
shall take place in Nashua, New Hampshire at a mutually convenient
location.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable
by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
<PAGE> 12
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(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or
otherwise.
15. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
John L. Patenaude
11 Derry Lane
Hudson, NH 03051
IF TO THE COMPANY:
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03060
Attention: President
or to such other address as either party shall have furnished
to the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by
the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's failure to insist upon strict compliance with
any provision hereof or the failure to assert any right the
Executive may have hereunder, including, without limitation,
the right to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v), shall not be deemed to be a waiver of
such provision or right or any other provision or right
thereof.
(f) This Agreement contains the entire understanding of the
Company and the Executive with
<PAGE> 13
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respect to the subject matter hereof. The Executive and the
Company acknowledge that the employment of the Executive by
the Company is "at will" and, prior to the Effective Date,
both the Executive's employment and this Agreement may be
terminated by either the Company or the Executive at any time.
In the event that this Agreement is terminated by the Company
prior to the Effective Date and the Executive remains employed
by the Company, the Executive would be entitled to the same
severance benefits as set forth in Section 7 of this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NASHUA CORPORATION EXECUTIVE
By /s/ Gerald G. Garbacz /s/ John L. Patenaude
------------------------------------- -----------------------------
President and Chief Executive Officer Name: John L. Patenaude
<PAGE> 1
EXHIBIT 10.03
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
AGREEMENT by and between NASHUA CORPORATION, a Delaware corporation (the
"Company") and BRUCE T. WRIGHT (the "Executive"), dated as of the 24th day of
June, 1998.
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company; and
WHEREAS, in order to accomplish these objectives, the Board believes it is in
the best interests of the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is
terminated or the Executive ceases to be an officer of the Company
prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated that such termination of employment (1) was at
the request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (2) otherwise arose in connection
with or anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof is hereinafter referred to as the "Renewal Date"),
the Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so extended.
<PAGE> 2
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of l934, as amended (the "Exchange Act"))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) (a "Person") of 30% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Company Voting
Securities"), PROVIDED, HOWEVER, that any acquisition by (x) the
Company or any of its subsidiaries, or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which, following
such acquisition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, shall not constitute a
Change of Control; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with
respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from Business Combination in
substantially the same proportion as their ownership immediately prior
to such Business Combination of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or of (ii)
sale or other disposition of all or substantially all of the assets of
the Company other than to a corporation with respect to which,
following such sale or disposition, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals
and
<PAGE> 3
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entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common
Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location where
the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve
on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the
Company.
<PAGE> 4
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(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall
be paid at a monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable to the Executive by
the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases in base salary awarded in
the ordinary course of business to other peer executives of the
Company and its affiliated companies. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term
"affiliated companies" includes any company controlled by,
controlling or under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year beginning or ending during
the Employment Period, an annual bonus (the "Annual Bonus") in
cash at least equal to the average bonus paid or payable,
including by reason of deferral, to the Executive by the Company
and its affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the Effective Date
occurs (annualized for any fiscal year during the Employment
Period consisting of less than twelve full months or with respect
to which the Executive has been employed by the Company for less
than twelve full months) (the "Recent Annual Bonus"). Each such
Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to Annual
Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive, savings and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than (x) the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date or (y)
if more favorable to the Executive, those provided at any time
after the Effective Date to other peer executives of the Company
and its affiliated companies.
<PAGE> 5
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(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally applicable to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with benefits which are less favorable, in the
aggregate, than (x) the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or (y) if more favorable to the Executive, those provided at any
time after the Effective Date generally to other peer executives
of the Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for the Executive at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to the Executive by the
Company and its affiliated companies at any time during the
90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at any
time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer incentives of the Company
and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
<PAGE> 6
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(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 15(b) of this
Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or Executive's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
(b) CAUSE. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause"
means (i) an action taken by the Executive involving willful and
wanton malfeasance involving specifically a wholly wrongful and
unlawful act, or (ii) the Executive being convicted of a felony.
(c) GOOD REASON. The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy Section
14(c) of this Agreement.
For purposes of this Agreement, any good faith determination of Good
Reason made by the Executive shall be conclusive.
<PAGE> 7
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(d) NOTICE OF TERMINATION. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
15(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the
extent applicable sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than fifteen days after the giving of such notice).
In the case of a termination of the Executive's employment for Cause,
a Notice of Termination shall include 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 the Executive and
reasonable opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board prior to such vote),
finding that in the good faith opinion of the Board the Executive was
guilty of conduct constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a Notice
of Termination. The failure by the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing the Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (ii) if the
Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following
obligations: (i) payment of the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (ii)
payment of the product of (x) the greater of (A) the Annual Bonus paid
or payable, including by reason of deferral, (and annualized for any
fiscal year consisting of less than twelve full months or for which
the Executive has been employed for less than twelve full months) for
the most recently completed fiscal year during the Employment Period,
if any, and (B) the Recent Annual Bonus (such greater amount hereafter
referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365
and (iii) payment of any compensation previously deferred by the
Executive (together with any accrued interest thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the amounts described in paragraphs (i), (ii) and (iii) are
hereafter referred to as "Accrued Obligations"). All Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive's estate or designated
beneficiaries shall be entitled to receive the Executive's Annual Base
Salary for the balance of the Employment Period; PROVIDED, HOWEVER,
that such payments of Annual Base Salary shall be reduced by any
<PAGE> 8
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survivor benefits paid to the Executive's estate or designated
beneficiary under the Retirement Plan. Anything in this Agreement to
the contrary notwithstanding, the Executive's estate and family shall
be entitled to receive benefits at least equal to the most favorable
benefits provided generally by the Company and any of its affiliated
companies to the estates and surviving families of peer executives of
the Company and such affiliated companies under such plans, programs,
practices and policies relating to death benefits, if any, as in
effect generally with respect to other peer executives and their
estates and families at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death generally with respect to other peer executives of
the Company and its affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations. All Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination. In addition, the Executive shall be entitled
to receive the Executive's Annual Base Salary for the balance of the
Employment Period; PROVIDED, HOWEVER, that such payments of Annual
Base Salary shall be reduced by any benefits paid to the Executive
under the Retirement Plan by reason of Disability. Anything in this
Agreement to the contrary notwithstanding, the Executive shall be
entitled after the Disability Effective Date to receive disability and
other benefits at least equal to the most favorable of those generally
provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their
families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive Annual Base Salary through
the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore
unpaid. If the Executive terminates employment during the Employment
Period other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during the
Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability, or the Executive shall
terminate employment during the Employment Period for Good Reason, the
Company shall pay to the Executive in a lump sum in cash within 60
days after the Date of Termination, and subject to receiving an
executed irrevocable Release as described in Section 11, the aggregate
of the following amounts:
A. all Accrued Obligations; and
B. the product of (x) three and (y) the sum of (i) Annual Base
Salary and (ii) the Highest Annual Bonus; and
<PAGE> 9
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C. a lump-sum retirement benefit equal to the difference between (a)
the actuarial equivalent of the benefit under the Nashua
Corporation Retirement Plan for Salaried Employees (the
"Retirement Plan") and any supplemental and/or excess retirement
plan providing benefits for the Executive (the "SERP") which the
Executive would receive if the Executive's employment continued
at the compensation level provided for in Sections 4(b)(i) and
4(b)(ii) of this Agreement for the remainder of the Employment
Period, assuming for this purpose that all accrued benefits are
fully vested, and (b) the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement
Plan and the SERP; for purposes of determining the amount payable
pursuant to this Section 6(d)(i)C the accrual formulas and
actuarial assumptions utilized shall be no less favorable than
those in effect with respect to the Retirement Plan and the SERP
during the 90-day period immediately prior to the Effective Date.
In addition, for the remainder of the Employment Period (if the
termination took place during the Employment Period under this Section
6), the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer
executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their
families. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed
until the end of the Employment Period and to have retired on the last
day of such period.
Notwithstanding the foregoing, if a Change of Control shall have
occurred before the Date of Termination, the aggregate amount of
"parachute payments", as defined in Section 280G of the Internal
Revenue Code of 1986, as amended from time to time (the "Code")
payable to the Executive pursuant to all arrangements with the Company
shall not exceed one dollar less than three times the Executive's
"base amount", as defined in Section 280G of the Code (the "cut back
amount"); provided, however, that if Executive would be better off by
at least $25,000 on an after-tax basis by receiving the full amount of
the parachute payments as opposed to the cut back amount
(notwithstanding a 20% excise tax) the Executive shall receive the
full amount of the parachute payments.
7. SEVERANCE BENEFITS. Notwithstanding anything contained in this Agreement to
the contrary, if, before or after the Employment Period, the Executive's
employment is terminated by the Company for reason other than misconduct,
the Company shall pay to the Executive one year's salary continuation and
continue medical and dental benefits during such continuation period.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any other agreements with the Company or any
of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program except as
<PAGE> 10
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explicitly modified by this Agreement.
9. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof, plus
in each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Internal Revenue Code of l986, as amended (the
"Code").
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces the Retention Agreement between the parties dated as of the 24th
day of October, 1997 and any and all other agreements, policies,
understandings or letters (including but not limited to employment
agreements, severance agreements and job abolishment policies) between the
parties related to the subject matter hereof.
11. RELEASE. Prior to receipt of the payment described in Sections 6(d) or 7,
the Executive shall execute and deliver a Release to the Company as
follows:
The Executive hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Company, its officers, directors,
stockholders, corporate affiliates, agents and employees from any and
all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings,
covenants, contracts, agreements, promises, doings, omissions,
damages, executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which he ever had
or now has against the Company, its officers, directors, stockholders,
corporate affiliates, agents and employees, including, but not limited
to, all claims arising out of his employment, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964,
42 U.S.C. ss.2000e ET SEQ., the Age Discrimination in Employment Act,
29 U.S.C., ss.621 ET SEQ., the Americans With Disabilities Act, 42
U.S.C., ss.12101 ET SEQ., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. ss.354-A:1 ET SEQ. and similar
state antidiscrimination laws, damages arising out of all employment
discrimination claims, wrongful discharge claims or other common law
claims and damages, provided, however, that nothing herein shall
release the Company from Executive's Stock Option Agreements or
Restricted Stock Agreements. The Release shall also contain, at a
minimum, the following language:
The Executive acknowledges that he has been given twenty-one (21)
days to consider the terms of this Release and that the Company
advised him to consult with an attorney of his own choosing prior
to signing this Release. The Executive may revoke this Release
for a period of seven (7) days after the execution of the Release
and the Release shall not be effective or enforceable until the
expiration of this seven (7) day revocation period.
At the same time, the Company shall execute and deliver a Release to the
Executive as follows:
The Company hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Executive from any and all claims
which it ever had or now has against the Executive, other than for
intentional harmful acts.
<PAGE> 11
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12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior
written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section 12 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
13. ARBITRATION. Any controversy or claim arising out of this Agreement shall
be settled by binding arbitration in accordance with the commercial rules,
policies and procedures of the American Arbitration Association. Judgment
upon any award rendered by the arbitrator may be entered in any court of
law having jurisdiction thereof. Arbitration shall take place in Nashua,
New Hampshire at a mutually convenient location.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
<PAGE> 12
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(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
IF TO THE EXECUTIVE:
Bruce T. Wright
110 Pokonoket Avenue
Sudbury, MA 01776
IF TO THE COMPANY:
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03060
Attention: President
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof or the failure to assert any right the Executive may
have hereunder, including, without limitation, the right to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v), shall not
be deemed to be a waiver of such provision or right or any other
provision or right thereof.
(f) This Agreement contains the entire understanding of the Company and
the Executive with
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respect to the subject matter hereof. The Executive and the Company
acknowledge that the employment of the Executive by the Company is "at
will" and, prior to the Effective Date, both the Executive's
employment and this Agreement may be terminated by either the Company
or the Executive at any time. In the event that this Agreement is
terminated by the Company prior to the Effective Date and the
Executive remains employed by the Company, the Executive would be
entitled to the same severance benefits as set forth in Section 7 of
this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NASHUA CORPORATION EXECUTIVE
By /s/ Gerald G. Garbacz /s/ Bruce T. Wright
------------------------------------- -----------------------
President and Chief Executive Officer Name: Bruce T. Wright
<PAGE> 1
EXHIBIT 10.04
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
AGREEMENT by and between NASHUA CORPORATION, a Delaware corporation (the
"Company") and JOSEPH R. MATSON (the "Executive"), dated as of the 24th day of
June, 1998.
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company; and
WHEREAS, in order to accomplish these objectives, the Board believes it is in
the best interests of the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is
terminated or the Executive ceases to be an officer of the Company
prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated that such termination of employment (1) was at
the request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (2) otherwise arose in connection
with or anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof is hereinafter referred to as the "Renewal Date"),
the Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so extended.
<PAGE> 2
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of l934, as amended (the "Exchange Act"))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) (a "Person") of 30% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Company Voting
Securities"), PROVIDED, HOWEVER, that any acquisition by (x) the
Company or any of its subsidiaries, or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which, following
such acquisition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, shall not constitute a
Change of Control; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with
respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from Business Combination in
substantially the same proportion as their ownership immediately prior
to such Business Combination of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or of (ii)
sale or other disposition of all or substantially all of the assets of
the Company other than to a corporation with respect to which,
following such sale or disposition, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals
and
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entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common
Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location where
the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve
on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the
Company.
<PAGE> 4
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(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall
be paid at a monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable to the Executive by
the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases in base salary awarded in
the ordinary course of business to other peer executives of the
Company and its affiliated companies. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term
"affiliated companies" includes any company controlled by,
controlling or under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year beginning or ending during
the Employment Period, an annual bonus (the "Annual Bonus") in
cash at least equal to the average bonus paid or payable,
including by reason of deferral, to the Executive by the Company
and its affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the Effective Date
occurs (annualized for any fiscal year during the Employment
Period consisting of less than twelve full months or with respect
to which the Executive has been employed by the Company for less
than twelve full months) (the "Recent Annual Bonus"). Each such
Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to Annual
Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive, savings and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than (x) the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date or (y)
if more favorable to the Executive, those provided at any time
after the Effective Date to other peer executives of the Company
and its affiliated companies.
<PAGE> 5
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(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally applicable to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with benefits which are less favorable, in the
aggregate, than (x) the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or (y) if more favorable to the Executive, those provided at any
time after the Effective Date generally to other peer executives
of the Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for the Executive at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to the Executive by the
Company and its affiliated companies at any time during the
90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at any
time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer incentives of the Company
and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
<PAGE> 6
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(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 15(b) of this
Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or Executive's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
(b) CAUSE. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause"
means (i) an action taken by the Executive involving willful and
wanton malfeasance involving specifically a wholly wrongful and
unlawful act, or (ii) the Executive being convicted of a felony.
(c) GOOD REASON. The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy Section
14(c) of this Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made
by the Executive shall be conclusive.
<PAGE> 7
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(d) NOTICE OF TERMINATION. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
15(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the
extent applicable sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than fifteen days after the giving of such notice).
In the case of a termination of the Executive's employment for Cause,
a Notice of Termination shall include 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 the Executive and
reasonable opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board prior to such vote),
finding that in the good faith opinion of the Board the Executive was
guilty of conduct constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a Notice
of Termination. The failure by the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing the Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (ii) if the
Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following
obligations: (i) payment of the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (ii)
payment of the product of (x) the greater of (A) the Annual Bonus paid
or payable, including by reason of deferral, (and annualized for any
fiscal year consisting of less than twelve full months or for which
the Executive has been employed for less than twelve full months) for
the most recently completed fiscal year during the Employment Period,
if any, and (B) the Recent Annual Bonus (such greater amount hereafter
referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365
and (iii) payment of any compensation previously deferred by the
Executive (together with any accrued interest thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the amounts described in paragraphs (i), (ii) and (iii) are
hereafter referred to as "Accrued Obligations"). All Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive's estate or designated
beneficiaries shall be entitled to receive the Executive's Annual Base
Salary for the balance of the Employment Period; PROVIDED, HOWEVER,
that such payments of Annual Base Salary shall be reduced by any
<PAGE> 8
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survivor benefits paid to the Executive's estate or designated
beneficiary under the Retirement Plan. Anything in this Agreement to
the contrary notwithstanding, the Executive's estate and family shall
be entitled to receive benefits at least equal to the most favorable
benefits provided generally by the Company and any of its affiliated
companies to the estates and surviving families of peer executives of
the Company and such affiliated companies under such plans, programs,
practices and policies relating to death benefits, if any, as in
effect generally with respect to other peer executives and their
estates and families at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death generally with respect to other peer executives of
the Company and its affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations. All Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination. In addition, the Executive shall be entitled
to receive the Executive's Annual Base Salary for the balance of the
Employment Period; PROVIDED, HOWEVER, that such payments of Annual
Base Salary shall be reduced by any benefits paid to the Executive
under the Retirement Plan by reason of Disability. Anything in this
Agreement to the contrary notwithstanding, the Executive shall be
entitled after the Disability Effective Date to receive disability and
other benefits at least equal to the most favorable of those generally
provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their
families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive Annual Base Salary through
the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore
unpaid. If the Executive terminates employment during the Employment
Period other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during the
Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability, or the Executive shall
terminate employment during the Employment Period for Good Reason, the
Company shall pay to the Executive in a lump sum in cash within 60
days after the Date of Termination, and subject to receiving an
executed irrevocable Release as described in Section 11, the aggregate
of the following amounts:
A. all Accrued Obligations; and
B. the product of (x) three and (y) the sum of (i) Annual Base
Salary and (ii) the Highest Annual Bonus; and
<PAGE> 9
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C. a lump-sum retirement benefit equal to the difference between (a)
the actuarial equivalent of the benefit under the Nashua
Corporation Retirement Plan for Salaried Employees (the
"Retirement Plan") and any supplemental and/or excess retirement
plan providing benefits for the Executive (the "SERP") which the
Executive would receive if the Executive's employment continued
at the compensation level provided for in Sections 4(b)(i) and
4(b)(ii) of this Agreement for the remainder of the Employment
Period, assuming for this purpose that all accrued benefits are
fully vested, and (b) the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement
Plan and the SERP; for purposes of determining the amount payable
pursuant to this Section 6(d)(i)C the accrual formulas and
actuarial assumptions utilized shall be no less favorable than
those in effect with respect to the Retirement Plan and the SERP
during the 90-day period immediately prior to the Effective Date.
In addition, for the remainder of the Employment Period (if the
termination took place during the Employment Period under this Section
6), the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer
executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their
families. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed
until the end of the Employment Period and to have retired on the last
day of such period.
Notwithstanding the foregoing, if a Change of Control shall have
occurred before the Date of Termination, the aggregate amount of
"parachute payments", as defined in Section 280G of the Internal
Revenue Code of 1986, as amended from time to time (the "Code")
payable to the Executive pursuant to all arrangements with the Company
shall not exceed one dollar less than three times the Executive's
"base amount", as defined in Section 280G of the Code (the "cut back
amount"); provided, however, that if Executive would be better off by
at least $25,000 on an after-tax basis by receiving the full amount of
the parachute payments as opposed to the cut back amount
(notwithstanding a 20% excise tax) the Executive shall receive the
full amount of the parachute payments.
7. SEVERANCE BENEFITS. Notwithstanding anything contained in this Agreement to
the contrary, if, before or after the Employment Period, the Executive's
employment is terminated by the Company for reason other than misconduct,
the Company shall pay to the Executive one year's salary continuation and
continue medical and dental benefits during such continuation period.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any other agreements with the Company or any
of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program except as
<PAGE> 10
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explicitly modified by this Agreement.
9. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof, plus
in each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Internal Revenue Code of l986, as amended (the
"Code").
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces the Retention Agreement between the parties dated as of the 24th
day of October, 1997 and any and all other agreements, policies,
understandings or letters (including but not limited to employment
agreements, severance agreements and job abolishment policies) between the
parties related to the subject matter hereof.
11. RELEASE. Prior to receipt of the payment described in Sections 6(d) or 7,
the Executive shall execute and deliver a Release to the Company as
follows:
The Executive hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Company, its officers, directors,
stockholders, corporate affiliates, agents and employees from any and
all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings,
covenants, contracts, agreements, promises, doings, omissions,
damages, executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which he ever had
or now has against the Company, its officers, directors, stockholders,
corporate affiliates, agents and employees, including, but not limited
to, all claims arising out of his employment, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964,
42 U.S.C. ss.2000e ET SEQ., the Age Discrimination in Employment Act,
29 U.S.C., ss.621 ET SEQ., the Americans With Disabilities Act, 42
U.S.C., ss.12101 ET SEQ., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. ss.354-A:1 ET SEQ. and similar
state antidiscrimination laws, damages arising out of all employment
discrimination claims, wrongful discharge claims or other common law
claims and damages, provided, however, that nothing herein shall
release the Company from Executive's Stock Option Agreements or
Restricted Stock Agreements. The Release shall also contain, at a
minimum, the following language:
The Executive acknowledges that he has been given twenty-one (21)
days to consider the terms of this Release and that the Company
advised him to consult with an attorney of his own choosing prior
to signing this Release. The Executive may revoke this Release
for a period of seven (7) days after the execution of the Release
and the Release shall not be effective or enforceable until the
expiration of this seven (7) day revocation period.
At the same time, the Company shall execute and deliver a Release to the
Executive as follows:
The Company hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Executive from any and all claims
which it ever had or now has against the Executive, other than for
intentional harmful acts.
<PAGE> 11
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12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior
written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section 12 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
13. ARBITRATION. Any controversy or claim arising out of this Agreement shall
be settled by binding arbitration in accordance with the commercial rules,
policies and procedures of the American Arbitration Association. Judgment
upon any award rendered by the arbitrator may be entered in any court of
law having jurisdiction thereof. Arbitration shall take place in Nashua,
New Hampshire at a mutually convenient location.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
<PAGE> 12
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(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
IF TO THE EXECUTIVE:
Joseph R. Matson
4 Pulpit Run
Amherst, NH 03031
IF TO THE COMPANY:
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03060
Attention: President
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof or the failure to assert any right the Executive may
have hereunder, including, without limitation, the right to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v), shall not
be deemed to be a waiver of such provision or right or any other
provision or right thereof.
(f) This Agreement contains the entire understanding of the Company and
the Executive with
<PAGE> 13
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respect to the subject matter hereof. The Executive and the Company
acknowledge that the employment of the Executive by the Company is "at
will" and, prior to the Effective Date, both the Executive's
employment and this Agreement may be terminated by either the Company
or the Executive at any time. In the event that this Agreement is
terminated by the Company prior to the Effective Date and the
Executive remains employed by the Company, the Executive would be
entitled to the same severance benefits as set forth in Section 7 of
this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NASHUA CORPORATION EXECUTIVE
By /s/ Gerald G. Garbacz /s/ Joseph R. Matson
------------------------------------- -----------------------
President and Chief Executive Officer Name: Joseph R. Matson
<PAGE> 1
Exhibit 10.05
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
AGREEMENT by and between NASHUA CORPORATION, a Delaware corporation (the
"Company") and EUGENE P. PACHE (the "Executive"), dated as of the 24th day of
June, 1998.
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company; and
WHEREAS, in order to accomplish these objectives, the Board believes it is in
the best interests of the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date during the
"Change of Control Period" (as defined in Section 1(b)) on
which a Change of Control occurs. Anything in this Agreement
to the contrary notwithstanding, if the Executive's employment
with the Company is terminated or the Executive ceases to be
an officer of the Company prior to the date on which a Change
of Control occurs, and it is reasonably demonstrated that such
termination of employment (1) was at the request of a third
party who has taken steps reasonably calculated to effect the
Change of Control or (2) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of
employment.
(b) The "Change of Control Period" is the period commencing on the
date hereof and ending on the third anniversary of such date;
provided, however, that commencing on the date one year after
the date hereof, and on each annual anniversary of such date
(such date and each annual anniversary thereof is hereinafter
referred to as the "Renewal Date"), the Change of Control
Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so
extended.
<PAGE> 2
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of l934,
as amended (the "Exchange Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) (a "Person") of 30% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), PROVIDED,
HOWEVER, that any acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which,
following such acquisition, more than 60% of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Company Voting Securities immediately prior
to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the
Outstanding Company Common Stock and Company Voting
Securities, as the case may be, shall not constitute a Change
of Control; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any individual
becoming a director subsequent to the date hereof whose
election or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business
Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such
Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from Business Combination in
substantially the same proportion as their ownership
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting
Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or of
(ii) sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with
respect to which, following such sale or disposition, more
than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors is then owned beneficially, directly
or indirectly, by all or substantially all of the individuals
and
<PAGE> 3
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entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially
the same proportion as their ownership of the Outstanding
Company Common Stock and Company Voting Securities, as the
case may be, immediately prior to such sale or disposition.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ
of the Company, for the period commencing on the Effective Date and
ending on the third anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in
all material respects with the most significant of
those held, exercised and assigned at any time during
the 90-day period immediately preceding the Effective
Date and (B) the Executive's services shall be
performed at the location where the Executive was
employed immediately preceding the Effective Date or
any office or location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business
hours to the business and affairs of the Company and,
to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder,
to use the Executive's reasonable best efforts to
perform faithfully and efficiently such
responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal
investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent
that any such activities have been conducted by the
Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of
activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter
be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid at a
monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable to the
Executive by the Company and its affiliated companies
in respect of the twelve-month period immediately
preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base
Salary shall be reviewed at least annually and shall
be increased at any time and from time to time as
shall be substantially consistent with increases in
<PAGE> 4
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base salary awarded in the ordinary course of
business to other peer executives of the Company and
its affiliated companies. Any increase in Annual Base
Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any
such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement,
the term "affiliated companies" includes any company
controlled by, controlling or under common control
with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year
beginning or ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least
equal to the average bonus paid or payable, including
by reason of deferral, to the Executive by the
Company and its affiliated companies in respect of
the three fiscal years immediately preceding the
fiscal year in which the Effective Date occurs
(annualized for any fiscal year during the Employment
Period consisting of less than twelve full months or
with respect to which the Executive has been employed
by the Company for less than twelve full months) (the
"Recent Annual Bonus"). Each such Annual Bonus shall
be paid no later than the end of the third month of
the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such
Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition
to Annual Base Salary and Annual Bonus payable as
hereinabove provided, the Executive shall be entitled
to participate during the Employment Period in all
incentive, savings and retirement plans, practices,
policies and programs applicable generally to other
peer executives of the Company and its affiliated
companies, but in no event shall such plans,
practices, policies and programs provide the
Executive with incentive, savings and retirement
benefit opportunities, in each case, less favorable,
in the aggregate, than (x) the most favorable of
those provided by the Company and its affiliated
companies for the Executive under such plans,
practices, policies and programs as in effect at any
time during the 90-day period immediately preceding
the Effective Date or (y) if more favorable to the
Executive, those provided at any time after the
Effective Date to other peer executives of the
Company and its affiliated companies.
(iv) WELFARE BENEFIT PLANS. During the Employment Period,
the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by
the Company and its affiliated companies (including,
without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group
life, accidental death and travel accident insurance
plans and programs) to the extent generally
applicable to other peer executives of the Company
and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide
the Executive with benefits which are less favorable,
in the aggregate, than (x) the most favorable of such
plans, practices, policies and programs in effect for
the Executive at any time during the 90-day period
immediately preceding the Effective Date or (y) if
more favorable to the Executive, those provided at
any time after the Effective Date generally to other
peer executives of the Company and its affiliated
companies.
<PAGE> 5
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(v) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in
accordance with the most favorable policies,
practices and procedures of the Company and its
affiliated companies in effect for the Executive at
any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits in
accordance with the most favorable plans, practices,
programs and policies of the Company and its
affiliated companies in effect for the Executive at
any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office
or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial
and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive
by the Company and its affiliated companies at any
time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the
Executive, as provided generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and
practices of the Company and its affiliated companies
as in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer
incentives of the Company and its affiliated
companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice
in accordance with Section 15(b) of this Agreement of its
intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of
the Executive's duties. For purposes of this Agreement,
"Disability" means the absence of the Executive from the
Executive's duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or Executive's legal
representative (such agreement as to acceptability not to be
withheld unreasonably).
<PAGE> 6
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(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this
Agreement, "Cause" means (i) an action taken by the Executive
involving willful and wanton malfeasance involving
specifically a wholly wrongful and unlawful act, or (ii) the
Executive being convicted of a felony.
(c) GOOD REASON. The Executive's employment may be terminated
during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of
this Agreement, or any other action by the Company
which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other
than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than that described in
Section 4(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 14(c) of this Agreement.
For purposes of this Agreement, any good faith determination
of Good Reason made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party
hereto given in accordance with Section 15(b) of this
Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon,
(ii) to the extent applicable sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision
so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). In the
case of a termination of the Executive's employment for Cause,
a Notice of Termination shall include 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 the Executive and reasonable opportunity for the
Executive, together with the Executive's counsel, to be heard
before the Board prior to such vote), finding that in the good
faith opinion of the Board the Executive was guilty of conduct
constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a
<PAGE> 7
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Notice of Termination. The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive
any right of the Executive hereunder or preclude the Executive
from asserting such fact or circumstance in enforcing the
Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that
(i) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination
shall be the date on which the Company notifies the Executive
of such termination and (ii) if the Executive's employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other
than the following obligations: (i) payment of the Executive's
Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (ii) payment of the product of
(x) the greater of (A) the Annual Bonus paid or payable,
including by reason of deferral, (and annualized for any
fiscal year consisting of less than twelve full months or for
which the Executive has been employed for less than twelve
full months) for the most recently completed fiscal year
during the Employment Period, if any, and (B) the Recent
Annual Bonus (such greater amount hereafter referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365
and (iii) payment of any compensation previously deferred by
the Executive (together with any accrued interest thereon) and
not yet paid by the Company and any accrued vacation pay not
yet paid by the Company (the amounts described in paragraphs
(i), (ii) and (iii) are hereafter referred to as "Accrued
Obligations"). All Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. In
addition, the Executive's estate or designated beneficiaries
shall be entitled to receive the Executive's Annual Base
Salary for 12 months; PROVIDED, HOWEVER, that such payments of
Annual Base Salary shall be reduced by any survivor benefits
paid to the Executive's estate or designated beneficiary under
the Retirement Plan. Anything in this Agreement to the
contrary notwithstanding, the Executive's estate and family
shall be entitled to receive benefits at least equal to the
most favorable benefits provided generally by the Company and
any of its affiliated companies to the estates and surviving
families of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies
relating to death benefits, if any, as in effect generally
with respect to other peer executives and their estates and
families at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect on the
date of the Executive's death generally with respect to other
peer executives of the Company and its affiliated companies
and their families.
(b) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued
Obligations. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive shall be entitled to
receive the Executive's Annual
<PAGE> 8
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Base Salary for the balance of the Employment Period;
PROVIDED, HOWEVER, that such payments of Annual Base Salary
shall be reduced by any benefits paid to the Executive under
the Retirement Plan by reason of Disability. Anything in this
Agreement to the contrary notwithstanding, the Executive shall
be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices
and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their
families at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and
their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay
to the Executive Annual Base Salary through the Date of
Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment
during the Employment Period other than for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations. In such case,
all Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during
the Employment Period, the Company shall terminate the
Executive's employment other than for Cause or Disability, or
the Executive shall terminate employment during the Employment
Period for Good Reason, the Company shall pay to the Executive
in a lump sum in cash within 60 days after the Date of
Termination, and subject to receiving an executed irrevocable
Release as described in Section 11, the aggregate of the
following amounts:
<PAGE> 9
-9-
A. all Accrued Obligations; and
B. the sum of (i) Annual Base Salary and (ii) the
Highest Annual Bonus; and
C. a lump-sum retirement benefit equal to the difference
between (a) the actuarial equivalent of the benefit
under the Nashua Corporation Retirement Plan for
Salaried Employees (the "Retirement Plan") and any
supplemental and/or excess retirement plan providing
benefits for the Executive (the "SERP") which the
Executive would receive if the Executive's employment
continued at the compensation level provided for in
Sections 4(b)(i) and 4(b)(ii) of this Agreement for
the remainder of the Employment Period, assuming for
this purpose that all accrued benefits are fully
vested, and (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any,
under the Retirement Plan and the SERP; for purposes
of determining the amount payable pursuant to this
Section 6(d)(i)C the accrual formulas and actuarial
assumptions utilized shall be no less favorable than
those in effect with respect to the Retirement Plan
and the SERP during the 90-day period immediately
prior to the Effective Date; and
In addition, for the remainder of the Employment Period (if
the termination took place during the Employment Period under
this Section 6), the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance
with the plans, programs, practices and policies described in
Section 4(b)(iv) of this Agreement if the Executive's
employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the
Company and its affiliated companies applicable generally to
other peer executives and their families during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the
Company and its affiliated companies and their families. For
purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and
to have retired on the last day of such period.
7. SEVERANCE BENEFITS.
Notwithstanding anything contained in this Agreement to the contrary,
if, before or after the Employment Period, the Executive's employment
is terminated by the Company for reason (i) other than misconduct or
(ii) due to the sale of the operation for which the Executive had
managing responsibility, the Company shall pay to the Executive one
year's salary continuation and continue medical and dental benefits
during such continuation period. In the event that the operations for
which the Executive had management responsibility are transferred to a
joint venture or entity which is 50% or more controlled by the Company
and the Executive is employed by such entity, the Executive shall not
be deemed terminated by the Company for purposes of this paragraph.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or
practices, provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under
any other agreements with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program except as explicitly
modified by this Agreement.
<PAGE> 10
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9. FULL SETTLEMENT. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company
may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement. The Company agrees to
pay, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof,
plus in each case interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Internal Revenue Code of l986, as amended
(the "Code").
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces the Retention Agreement between the parties dated as of the
24th day of October, 1997 and any and all other agreements, policies,
understandings or letters (including but not limited to employment
agreements, severance agreements and job abolishment policies) between
the parties related to the subject matter hereof.
11. RELEASE. Prior to receipt of the payment described in Section 6(d) the
Executive shall execute and deliver a Release to the Company as
follows:
The Executive hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company,
its officers, directors, stockholders, corporate affiliates,
agents and employees from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights,
debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages,
executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which he
ever had or now has against the Company, its officers,
directors, stockholders, corporate affiliates, agents and
employees, including, but not limited to, all claims arising
out of his employment, all employment discrimination claims
under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
ss.2000e ET SEQ., the Age Discrimination in Employment Act, 29
U.S.C., ss.621 ET SEQ., the Americans With Disabilities Act,
42 U.S.C., ss.12101 ET SEQ., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. ss.354-A:1 ET SEQ. and
similar state antidiscrimination laws, damages arising out of
all employment discrimination claims, wrongful discharge
claims or other common law claims and damages, provided,
however, that nothing herein shall release the Company from
Executive's Stock Option Agreements. The Release shall also
contain, at a minimum, the following language:
The Executive acknowledges that he has been given
twenty-one (21) days to consider the terms of this
Release and that the Company advised him to consult
with an attorney of his own choosing prior to signing
this Release. The Executive may revoke this Release
for a period of seven (7) days after the execution of
the Release and the Release shall not be effective or
enforceable until the expiration of this seven (7)
day revocation period.
At the same time, the Company shall execute and deliver a Release to
the Executive as follows:
The Company hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Executive
from any and all claims which it ever had or now has against
the Executive, other than for intentional harmful acts.
12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the
<PAGE> 11
-11-
Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, communicate or
divulge any such information, knowledge or data to anyone other than
the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 12 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
13. ARBITRATION. Any controversy or claim arising out of this Agreement
shall be settled by binding arbitration in accordance with the
commercial rules, policies and procedures of the American Arbitration
Association. Judgment upon any award rendered by the arbitrator may be
entered in any court of law having jurisdiction thereof. Arbitration
shall take place in Nashua, New Hampshire at a mutually convenient
location.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable
by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or
otherwise.
15. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Eugene P. Pache
9729 Fieldcrest Drive
<PAGE> 12
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Omaha, NE 68114
IF TO THE COMPANY:
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03060
Attention: President
or to such other address as either party shall have furnished
to the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by
the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's failure to insist upon strict compliance with
any provision hereof or the failure to assert any right the
Executive may have hereunder, including, without limitation,
the right to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v), shall not be deemed to be a waiver of
such provision or right or any other provision or right
thereof.
(f) This Agreement contains the entire understanding of the
Company and the Executive with respect to the subject matter
hereof. The Executive and the Company acknowledge that the
employment of the Executive by the Company is "at will" and,
prior to the Effective Date, both the Executive's employment
and this Agreement may be terminated by either the Company or
the Executive at any time. In the event that this Agreement is
terminated by the Company prior to the Effective Date and the
Executive remains employed by the Company, the Executive would
be entitled to the same severance benefits as set forth in
Section 7 of this Agreement.
<PAGE> 13
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NASHUA CORPORATION EXECUTIVE
By /s/ Gerald G. Garbacz /s/ Eugene P. Pache
------------------------------------- -------------------------------
President and Chief Executive Officer Name: Eugene P. Pache
<PAGE> 1
EXHIBIT 10.06
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
AGREEMENT by and between NASHUA CORPORATION, a Delaware corporation (the
"Company") and PETER C. ANASTOS (the "Executive"), dated as of the 24th day of
June, 1998.
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company; and
WHEREAS, in order to accomplish these objectives, the Board believes it is in
the best interests of the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is
terminated or the Executive ceases to be an officer of the Company
prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated that such termination of employment (1) was at
the request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (2) otherwise arose in connection
with or anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof is hereinafter referred to as the "Renewal Date"),
the Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so extended.
<PAGE> 2
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of l934, as amended (the "Exchange Act"))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) (a "Person") of 30% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Company Voting
Securities"), PROVIDED, HOWEVER, that any acquisition by (x) the
Company or any of its subsidiaries, or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which, following
such acquisition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, shall not constitute a
Change of Control; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with
respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from Business Combination in
substantially the same proportion as their ownership immediately prior
to such Business Combination of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or of (ii)
sale or other disposition of all or substantially all of the assets of
the Company other than to a corporation with respect to which,
following such sale or disposition, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals
and
<PAGE> 3
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entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common
Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location where
the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve
on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the
Company.
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(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall
be paid at a monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable to the Executive by
the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases in base salary awarded in
the ordinary course of business to other peer executives of the
Company and its affiliated companies. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term
"affiliated companies" includes any company controlled by,
controlling or under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year beginning or ending during
the Employment Period, an annual bonus (the "Annual Bonus") in
cash at least equal to the average bonus paid or payable,
including by reason of deferral, to the Executive by the Company
and its affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the Effective Date
occurs (annualized for any fiscal year during the Employment
Period consisting of less than twelve full months or with respect
to which the Executive has been employed by the Company for less
than twelve full months) (the "Recent Annual Bonus"). Each such
Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to Annual
Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive, savings and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than (x) the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date or (y)
if more favorable to the Executive, those provided at any time
after the Effective Date to other peer executives of the Company
and its affiliated companies.
<PAGE> 5
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(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally applicable to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with benefits which are less favorable, in the
aggregate, than (x) the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or (y) if more favorable to the Executive, those provided at any
time after the Effective Date generally to other peer executives
of the Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for the Executive at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to the Executive by the
Company and its affiliated companies at any time during the
90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at any
time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer incentives of the Company
and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
<PAGE> 6
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(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 15(b) of this
Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or Executive's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
(b) CAUSE. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause"
means (i) an action taken by the Executive involving willful and
wanton malfeasance involving specifically a wholly wrongful and
unlawful act, or (ii) the Executive being convicted of a felony.
(c) GOOD REASON. The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy Section
14(c) of this Agreement.
For purposes of this Agreement, any good faith determination of Good Reason
made by the Executive shall be conclusive.
<PAGE> 7
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(d) NOTICE OF TERMINATION. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
15(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the
extent applicable sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than fifteen days after the giving of such notice).
In the case of a termination of the Executive's employment for Cause,
a Notice of Termination shall include 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 the Executive and
reasonable opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board prior to such vote),
finding that in the good faith opinion of the Board the Executive was
guilty of conduct constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a Notice
of Termination. The failure by the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing the Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (ii) if the
Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following
obligations: (i) payment of the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (ii)
payment of the product of (x) the greater of (A) the Annual Bonus paid
or payable, including by reason of deferral, (and annualized for any
fiscal year consisting of less than twelve full months or for which
the Executive has been employed for less than twelve full months) for
the most recently completed fiscal year during the Employment Period,
if any, and (B) the Recent Annual Bonus (such greater amount hereafter
referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365
and (iii) payment of any compensation previously deferred by the
Executive (together with any accrued interest thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the amounts described in paragraphs (i), (ii) and (iii) are
hereafter referred to as "Accrued Obligations"). All Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive's estate or designated
beneficiaries shall be entitled to receive the Executive's Annual Base
Salary for the balance of the Employment Period; PROVIDED, HOWEVER,
that such payments of Annual Base Salary shall be reduced by any
<PAGE> 8
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survivor benefits paid to the Executive's estate or designated
beneficiary under the Retirement Plan. Anything in this Agreement to
the contrary notwithstanding, the Executive's estate and family shall
be entitled to receive benefits at least equal to the most favorable
benefits provided generally by the Company and any of its affiliated
companies to the estates and surviving families of peer executives of
the Company and such affiliated companies under such plans, programs,
practices and policies relating to death benefits, if any, as in
effect generally with respect to other peer executives and their
estates and families at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death generally with respect to other peer executives of
the Company and its affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations. All Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination. In addition, the Executive shall be entitled
to receive the Executive's Annual Base Salary for the balance of the
Employment Period; PROVIDED, HOWEVER, that such payments of Annual
Base Salary shall be reduced by any benefits paid to the Executive
under the Retirement Plan by reason of Disability. Anything in this
Agreement to the contrary notwithstanding, the Executive shall be
entitled after the Disability Effective Date to receive disability and
other benefits at least equal to the most favorable of those generally
provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their
families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive Annual Base Salary through
the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore
unpaid. If the Executive terminates employment during the Employment
Period other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during the
Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability, or the Executive shall
terminate employment during the Employment Period for Good Reason, the
Company shall pay to the Executive in a lump sum in cash within 60
days after the Date of Termination, and subject to receiving an
executed irrevocable Release as described in Section 11, the aggregate
of the following amounts:
A. all Accrued Obligations; and
B. the product of (x) three and (y) the sum of (i) Annual Base
Salary and (ii) the Highest Annual Bonus; and
<PAGE> 9
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C. a lump-sum retirement benefit equal to the difference between (a)
the actuarial equivalent of the benefit under the Nashua
Corporation Retirement Plan for Salaried Employees (the
"Retirement Plan") and any supplemental and/or excess retirement
plan providing benefits for the Executive (the "SERP") which the
Executive would receive if the Executive's employment continued
at the compensation level provided for in Sections 4(b)(i) and
4(b)(ii) of this Agreement for the remainder of the Employment
Period, assuming for this purpose that all accrued benefits are
fully vested, and (b) the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement
Plan and the SERP; for purposes of determining the amount payable
pursuant to this Section 6(d)(i)C the accrual formulas and
actuarial assumptions utilized shall be no less favorable than
those in effect with respect to the Retirement Plan and the SERP
during the 90-day period immediately prior to the Effective Date.
In addition, for the remainder of the Employment Period (if the
termination took place during the Employment Period under this Section
6), the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer
executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their
families. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed
until the end of the Employment Period and to have retired on the last
day of such period.
Notwithstanding the foregoing, if a Change of Control shall have
occurred before the Date of Termination, the aggregate amount of
"parachute payments", as defined in Section 280G of the Internal
Revenue Code of 1986, as amended from time to time (the "Code")
payable to the Executive pursuant to all arrangements with the Company
shall not exceed one dollar less than three times the Executive's
"base amount", as defined in Section 280G of the Code (the "cut back
amount"); provided, however, that if Executive would be better off by
at least $25,000 on an after-tax basis by receiving the full amount of
the parachute payments as opposed to the cut back amount
(notwithstanding a 20% excise tax) the Executive shall receive the
full amount of the parachute payments.
7. SEVERANCE BENEFITS. Notwithstanding anything contained in this Agreement to
the contrary, if, before or after the Employment Period, the Executive's
employment is terminated by the Company for reason other than misconduct,
the Company shall pay to the Executive one year's salary continuation and
continue medical and dental benefits during such continuation period.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any other agreements with the Company or any
of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program except as
<PAGE> 10
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explicitly modified by this Agreement.
9. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof, plus
in each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Internal Revenue Code of l986, as amended (the
"Code").
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces the Retention Agreement between the parties dated as of the 24th
day of October, 1997 and any and all other agreements, policies,
understandings or letters (including but not limited to employment
agreements, severance agreements and job abolishment policies) between the
parties related to the subject matter hereof.
11. RELEASE. Prior to receipt of the payment described in Sections 6(d) or 7,
the Executive shall execute and deliver a Release to the Company as
follows:
The Executive hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Company, its officers, directors,
stockholders, corporate affiliates, agents and employees from any and
all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings,
covenants, contracts, agreements, promises, doings, omissions,
damages, executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which he ever had
or now has against the Company, its officers, directors, stockholders,
corporate affiliates, agents and employees, including, but not limited
to, all claims arising out of his employment, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964,
42 U.S.C. ss.2000e ET SEQ., the Age Discrimination in Employment Act,
29 U.S.C., ss.621 ET SEQ., the Americans With Disabilities Act, 42
U.S.C., ss.12101 ET SEQ., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. ss.354-A:1 ET SEQ. and similar
state antidiscrimination laws, damages arising out of all employment
discrimination claims, wrongful discharge claims or other common law
claims and damages, provided, however, that nothing herein shall
release the Company from Executive's Stock Option Agreements or
Restricted Stock Agreements. The Release shall also contain, at a
minimum, the following language:
The Executive acknowledges that he has been given twenty-one (21)
days to consider the terms of this Release and that the Company
advised him to consult with an attorney of his own choosing prior
to signing this Release. The Executive may revoke this Release
for a period of seven (7) days after the execution of the Release
and the Release shall not be effective or enforceable until the
expiration of this seven (7) day revocation period.
At the same time, the Company shall execute and deliver a Release to the
Executive as follows:
The Company hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Executive from any and all claims
which it ever had or now has against the Executive, other than for
intentional harmful acts.
<PAGE> 11
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12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior
written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section 12 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
13. ARBITRATION. Any controversy or claim arising out of this Agreement shall
be settled by binding arbitration in accordance with the commercial rules,
policies and procedures of the American Arbitration Association. Judgment
upon any award rendered by the arbitrator may be entered in any court of
law having jurisdiction thereof. Arbitration shall take place in Nashua,
New Hampshire at a mutually convenient location.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
<PAGE> 12
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(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
IF TO THE EXECUTIVE:
Peter C. Anastos
74 Virginia Road
Concord, MA 01742
IF TO THE COMPANY:
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03060
Attention: President
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof or the failure to assert any right the Executive may
have hereunder, including, without limitation, the right to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v), shall not
be deemed to be a waiver of such provision or right or any other
provision or right thereof.
(f) This Agreement contains the entire understanding of the Company and
the Executive with
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respect to the subject matter hereof. The Executive and the Company
acknowledge that the employment of the Executive by the Company is "at
will" and, prior to the Effective Date, both the Executive's
employment and this Agreement may be terminated by either the Company
or the Executive at any time. In the event that this Agreement is
terminated by the Company prior to the Effective Date and the
Executive remains employed by the Company, the Executive would be
entitled to the same severance benefits as set forth in Section 7 of
this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NASHUA CORPORATION EXECUTIVE
By /s/ Gerald G. Garbacz /s/ Peter C. Anastos
------------------------------------- --------------------------
President and Chief Executive Officer Name: Peter C. Anastos
<PAGE> 1
Exhibit 10.07
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
-----------------------------------------
AGREEMENT by and between NASHUA CORPORATION, a Delaware corporation (the
"Company") and JOSEPH I. GONZALEZ-RIVAS (the "Executive"), dated as of the 24th
day of June, 1998.
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company; and
WHEREAS, in order to accomplish these objectives, the Board believes it is in
the best interests of the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is
terminated or the Executive ceases to be an officer of the Company
prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated that such termination of employment (1) was at
the request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (2) otherwise arose in connection
with or anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof is hereinafter referred to as the "Renewal Date"),
the Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so extended.
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of l934, as amended (the "Exchange Act"))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) (a "Person") of 30% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Company Voting
Securities"), PROVIDED, HOWEVER, that any acquisition by (x) the
Company or any of its subsidiaries, or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which, following
such acquisition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, shall not constitute a
Change of Control; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with
respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from Business Combination in
substantially the same proportion as their ownership immediately prior
to such Business Combination of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or of (ii)
sale or other disposition of all or substantially all of the assets of
the Company other than to a corporation with respect to which,
following such sale or disposition, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals
and
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entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common
Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location where
the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve
on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the
Company.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall
be paid at a monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable to the Executive by
the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases in
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base salary awarded in the ordinary course of business to other
peer executives of the Company and its affiliated companies. Any
increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" includes any
company controlled by, controlling or under common control with
the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year beginning or ending during
the Employment Period, an annual bonus (the "Annual Bonus") in
cash at least equal to the average bonus paid or payable,
including by reason of deferral, to the Executive by the Company
and its affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the Effective Date
occurs (annualized for any fiscal year during the Employment
Period consisting of less than twelve full months or with respect
to which the Executive has been employed by the Company for less
than twelve full months) (the "Recent Annual Bonus"). Each such
Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to Annual
Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive, savings and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than (x) the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date or (y)
if more favorable to the Executive, those provided at any time
after the Effective Date to other peer executives of the Company
and its affiliated companies.
(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally applicable to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with benefits which are less favorable, in the
aggregate, than (x) the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or (y) if more favorable to the Executive, those provided at any
time after the Effective Date generally to other peer executives
of the Company and its affiliated companies.
<PAGE> 5
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(v) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for the Executive at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to the Executive by the
Company and its affiliated companies at any time during the
90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at any
time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer incentives of the Company
and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 15(b) of this
Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or Executive's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
<PAGE> 6
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(b) CAUSE. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause"
means (i) an action taken by the Executive involving willful and
wanton malfeasance involving specifically a wholly wrongful and
unlawful act, or (ii) the Executive being convicted of a felony.
(c) GOOD REASON. The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy Section
14(c) of this Agreement.
For purposes of this Agreement, any good faith determination of Good
Reason made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
15(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the
extent applicable sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than fifteen days after the giving of such notice).
In the case of a termination of the Executive's employment for Cause,
a Notice of Termination shall include 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 the Executive and
reasonable opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board prior to such vote),
finding that in the good faith opinion of the Board the Executive was
guilty of conduct constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a
<PAGE> 7
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Notice of Termination. The failure by the Executive to set forth in
the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing the Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (ii) if the
Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following
obligations: (i) payment of the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (ii)
payment of the product of (x) the greater of (A) the Annual Bonus paid
or payable, including by reason of deferral, (and annualized for any
fiscal year consisting of less than twelve full months or for which
the Executive has been employed for less than twelve full months) for
the most recently completed fiscal year during the Employment Period,
if any, and (B) the Recent Annual Bonus (such greater amount hereafter
referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365
and (iii) payment of any compensation previously deferred by the
Executive (together with any accrued interest thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the amounts described in paragraphs (i), (ii) and (iii) are
hereafter referred to as "Accrued Obligations"). All Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive's estate or designated
beneficiaries shall be entitled to receive the Executive's Annual Base
Salary for 12 months; PROVIDED, HOWEVER, that such payments of Annual
Base Salary shall be reduced by any survivor benefits paid to the
Executive's estate or designated beneficiary under the Retirement
Plan. Anything in this Agreement to the contrary notwithstanding, the
Executive's estate and family shall be entitled to receive benefits at
least equal to the most favorable benefits provided generally by the
Company and any of its affiliated companies to the estates and
surviving families of peer executives of the Company and such
affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect generally
with respect to other peer executives and their estates and families
at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death
generally with respect to other peer executives of the Company and its
affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations. All Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination. In addition, the Executive shall be entitled
to receive the Executive's Annual
<PAGE> 8
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Base Salary for the balance of the Employment Period; PROVIDED,
HOWEVER, that such payments of Annual Base Salary shall be reduced by
any benefits paid to the Executive under the Retirement Plan by reason
of Disability. Anything in this Agreement to the contrary
notwithstanding, the Executive shall be entitled after the Disability
Effective Date to receive disability and other benefits at least equal
to the most favorable of those generally provided by the Company and
its affiliated companies to disabled executives and/or their families
in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to
other peer executives and their families at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable
to the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive Annual Base Salary through
the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore
unpaid. If the Executive terminates employment during the Employment
Period other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during the
Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability, or the Executive shall
terminate employment during the Employment Period for Good Reason, the
Company shall pay to the Executive in a lump sum in cash within 60
days after the Date of Termination, and subject to receiving an
executed irrevocable Release as described in Section 11, the aggregate
of the following amounts:
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A. all Accrued Obligations; and
B. the product of (x) two and (y) the sum of (i) Annual Base Salary
and (ii) the Highest Annual Bonus; and
C. a lump-sum retirement benefit equal to the difference between (a)
the actuarial equivalent of the benefit under the Nashua
Corporation Retirement Plan for Salaried Employees (the
"Retirement Plan") and any supplemental and/or excess retirement
plan providing benefits for the Executive (the "SERP") which the
Executive would receive if the Executive's employment continued
at the compensation level provided for in Sections 4(b)(i) and
4(b)(ii) of this Agreement for the remainder of the Employment
Period, assuming for this purpose that all accrued benefits are
fully vested, and (b) the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement
Plan and the SERP; for purposes of determining the amount payable
pursuant to this Section 6(d)(i)C the accrual formulas and
actuarial assumptions utilized shall be no less favorable than
those in effect with respect to the Retirement Plan and the SERP
during the 90-day period immediately prior to the Effective Date;
and
In addition, for the remainder of the Employment Period (if the
termination took place during the Employment Period under this Section
6), the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer
executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their
families. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed
until the end of the Employment Period and to have retired on the last
day of such period.
7. SEVERANCE BENEFITS.
Notwithstanding anything contained in this Agreement to the contrary, (i)
if, before or after the Employment Period, the Executive's employment is
terminated by the Company for reason other than misconduct, the Company
shall pay to the Executive one year's salary continuation and continue
medical and dental benefits during such continuation period, or (ii) if,
before or after the Employment Period, the Executive's employment is
terminated due to the sale of the operation for which the Executive had
managing responsibility, the Company shall pay to the Executive two year's
salary continuation and continue medical and dental benefits during such
continuation period. In the event that the operations for which the
Executive had management responsibility are transferred to a joint venture
or entity which is 50% or more controlled by the Company and the Executive
is employed by such entity, the Executive shall not be deemed terminated by
the Company for purposes of this paragraph.
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8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any other agreements with the Company or any
of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program except as explicitly modified by
this Agreement.
9. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof, plus
in each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Internal Revenue Code of l986, as amended (the
"Code").
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces the Retention Agreement between the parties dated as of the 24th
day of October, 1997 and any and all other agreements, policies,
understandings or letters (including but not limited to employment
agreements, severance agreements and job abolishment policies) between the
parties related to the subject matter hereof.
11. RELEASE. Prior to receipt of the payment described in Section 6(d) the
Executive shall execute and deliver a Release to the Company as follows:
The Executive hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Company, its officers, directors,
stockholders, corporate affiliates, agents and employees from any and
all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings,
covenants, contracts, agreements, promises, doings, omissions,
damages, executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which he ever had
or now has against the Company, its officers, directors, stockholders,
corporate affiliates, agents and employees, including, but not limited
to, all claims arising out of his employment, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964,
42 U.S.C. ss.2000e et seq., the Age Discrimination in Employment Act,
29 U.S.C., ss.621 et seq., the Americans With Disabilities Act, 42
U.S.C., ss.12101 et seq., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. ss.354-A:1 et seq. and similar
state antidiscrimination laws, damages arising out of all employment
discrimination claims, wrongful discharge claims or other common law
claims and damages, provided, however, that nothing herein shall
release the Company from Executive's Stock Option Agreements. The
Release shall also contain, at a minimum, the following language:
<PAGE> 11
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The Executive acknowledges that he has been given twenty-one (21)
days to consider the terms of this Release and that the Company
advised him to consult with an attorney of his own choosing prior
to signing this Release. The Executive may revoke this Release
for a period of seven (7) days after the execution of the Release
and the Release shall not be effective or enforceable until the
expiration of this seven (7) day revocation period.
At the same time, the Company shall execute and deliver a Release to the
Executive as follows:
The Company hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Executive from any and all claims
which it ever had or now has against the Executive, other than for
intentional harmful acts.
12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior
written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section 12 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
13. ARBITRATION. Any controversy or claim arising out of this Agreement shall
be settled by binding arbitration in accordance with the commercial rules,
policies and procedures of the American Arbitration Association. Judgment
upon any award rendered by the arbitrator may be entered in any court of
law having jurisdiction thereof. Arbitration shall take place in Nashua,
New Hampshire at a mutually convenient location.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. MISCELLANEOUS.
<PAGE> 12
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(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Executive:
--------------------
Joseph I. Gonzalez-Rivas
19 The Flume
Amherst, NH 03031
If to the Company:
------------------
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03060
Attention: President
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof or the failure to assert any right the Executive may
have hereunder, including, without limitation, the right to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v), shall not
be deemed to be a waiver of such provision or right or any other
provision or right thereof.
(f) This Agreement contains the entire understanding of the Company and
the Executive with respect to the subject matter hereof. The Executive
and the Company acknowledge that the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, both the
Executive's employment and this Agreement may be terminated by either
the Company or the Executive at any time. In the event that this
Agreement is terminated by the Company prior to the Effective Date and
the Executive remains employed by the Company, the Executive would be
entitled to the same severance benefits as set forth in Section 7 of
this Agreement.
<PAGE> 13
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NASHUA CORPORATION EXECUTIVE
By /s/ Gerald G. Garbacz /s/ Joseph I. Gonzalez-Rivas
------------------------------------- ----------------------------
President and Chief Executive Officer Name: Joseph I. Gonzalez-Rivas
<PAGE> 1
Exhibit 10.08
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
-----------------------------------------
AGREEMENT by and between NASHUA CORPORATION, a Delaware corporation (the
"Company") and JOHN J. IRELAND (the "Executive"), dated as of the 24th day of
June, 1998.
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company or other reasons of uncertainty;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and business concerns and
to encourage the Executive's full attention and dedication to the Company; and
WHEREAS, in order to accomplish these objectives, the Board believes it is in
the best interests of the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is
terminated or the Executive ceases to be an officer of the Company
prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated that such termination of employment (1) was at
the request of a third party who has taken steps reasonably calculated
to effect the Change of Control or (2) otherwise arose in connection
with or anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof is hereinafter referred to as the "Renewal Date"),
the Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so extended.
<PAGE> 2
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of l934, as amended (the "Exchange Act"))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) (a "Person") of 30% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Company Voting
Securities"), PROVIDED, HOWEVER, that any acquisition by (x) the
Company or any of its subsidiaries, or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which, following
such acquisition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, shall not constitute a
Change of Control; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with
respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from Business Combination in
substantially the same proportion as their ownership immediately prior
to such Business Combination of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or of (ii)
sale or other disposition of all or substantially all of the assets of
the Company other than to a corporation with respect to which,
following such sale or disposition, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals
and
<PAGE> 3
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entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common
Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
third anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location where
the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve
on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the
Company.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall
be paid at a monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable to the Executive by
the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases
<PAGE> 4
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in base salary awarded in the ordinary course of business to
other peer executives of the Company and its affiliated
companies. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" includes
any company controlled by, controlling or under common control
with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year beginning or ending during
the Employment Period, an annual bonus (the "Annual Bonus") in
cash at least equal to the average bonus paid or payable,
including by reason of deferral, to the Executive by the Company
and its affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the Effective Date
occurs (annualized for any fiscal year during the Employment
Period consisting of less than twelve full months or with respect
to which the Executive has been employed by the Company for less
than twelve full months) (the "Recent Annual Bonus"). Each such
Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to Annual
Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive, savings and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than (x) the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date or (y)
if more favorable to the Executive, those provided at any time
after the Effective Date to other peer executives of the Company
and its affiliated companies.
(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally applicable to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with benefits which are less favorable, in the
aggregate, than (x) the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or (y) if more favorable to the Executive, those provided at any
time after the Effective Date generally to other peer executives
of the Company and its affiliated companies.
<PAGE> 5
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(v) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for the Executive at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to the Executive by the
Company and its affiliated companies at any time during the
90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at any
time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer incentives of the Company
and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 15(b) of this
Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or Executive's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
<PAGE> 6
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(b) CAUSE. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause"
means (i) an action taken by the Executive involving willful and
wanton malfeasance involving specifically a wholly wrongful and
unlawful act, or (ii) the Executive being convicted of a felony.
(c) GOOD REASON. The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy Section
14(c) of this Agreement.
For purposes of this Agreement, any good faith determination of Good
Reason made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
15(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the
extent applicable sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than fifteen days after the giving of such notice).
In the case of a termination of the Executive's employment for Cause,
a Notice of Termination shall include 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 the Executive and
reasonable opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board prior to such vote),
finding that in the good faith opinion of the Board the Executive was
guilty of conduct constituting Cause. No purported termination of the
Executive's employment for Cause shall be effective without a
<PAGE> 7
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Notice of Termination. The failure by the Executive to set forth in
the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing the Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (ii) if the
Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following
obligations: (i) payment of the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (ii)
payment of the product of (x) the greater of (A) the Annual Bonus paid
or payable, including by reason of deferral, (and annualized for any
fiscal year consisting of less than twelve full months or for which
the Executive has been employed for less than twelve full months) for
the most recently completed fiscal year during the Employment Period,
if any, and (B) the Recent Annual Bonus (such greater amount hereafter
referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365
and (iii) payment of any compensation previously deferred by the
Executive (together with any accrued interest thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the amounts described in paragraphs (i), (ii) and (iii) are
hereafter referred to as "Accrued Obligations"). All Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive's estate or designated
beneficiaries shall be entitled to receive the Executive's Annual Base
Salary for 12 months; PROVIDED, HOWEVER, that such payments of Annual
Base Salary shall be reduced by any survivor benefits paid to the
Executive's estate or designated beneficiary under the Retirement
Plan. Anything in this Agreement to the contrary notwithstanding, the
Executive's estate and family shall be entitled to receive benefits at
least equal to the most favorable benefits provided generally by the
Company and any of its affiliated companies to the estates and
surviving families of peer executives of the Company and such
affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect generally
with respect to other peer executives and their estates and families
at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death
generally with respect to other peer executives of the Company and its
affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations. All Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination. In addition, the Executive shall be entitled
to receive the Executive's Annual
<PAGE> 8
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Base Salary for the balance of the Employment Period; PROVIDED,
HOWEVER, that such payments of Annual Base Salary shall be reduced by
any benefits paid to the Executive under the Retirement Plan by reason
of Disability. Anything in this Agreement to the contrary
notwithstanding, the Executive shall be entitled after the Disability
Effective Date to receive disability and other benefits at least equal
to the most favorable of those generally provided by the Company and
its affiliated companies to disabled executives and/or their families
in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to
other peer executives and their families at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable
to the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive Annual Base Salary through
the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore
unpaid. If the Executive terminates employment during the Employment
Period other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during the
Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability, or the Executive shall
terminate employment during the Employment Period for Good Reason, the
Company shall pay to the Executive in a lump sum in cash within 60
days after the Date of Termination, and subject to receiving an
executed irrevocable Release as described in Section 11, the aggregate
of the following amounts:
<PAGE> 9
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A. all Accrued Obligations; and
B. the sum of (i) Annual Base Salary and (ii) the Highest Annual
Bonus; and
C. a lump-sum retirement benefit equal to the difference between (a)
the actuarial equivalent of the benefit under the Nashua
Corporation Retirement Plan for Salaried Employees (the
"Retirement Plan") and any supplemental and/or excess retirement
plan providing benefits for the Executive (the "SERP") which the
Executive would receive if the Executive's employment continued
at the compensation level provided for in Sections 4(b)(i) and
4(b)(ii) of this Agreement for the remainder of the Employment
Period, assuming for this purpose that all accrued benefits are
fully vested, and (b) the actuarial equivalent of the Executive's
actual benefit (paid or payable), if any, under the Retirement
Plan and the SERP; for purposes of determining the amount payable
pursuant to this Section 6(d)(i)C the accrual formulas and
actuarial assumptions utilized shall be no less favorable than
those in effect with respect to the Retirement Plan and the SERP
during the 90-day period immediately prior to the Effective Date;
and
In addition, for the remainder of the Employment Period (if the
termination took place during the Employment Period under this Section
6), the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer
executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their
families. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed
until the end of the Employment Period and to have retired on the last
day of such period.
7. SEVERANCE BENEFITS.
Notwithstanding anything contained in this Agreement to the contrary, if,
before or after the Employment Period, the Executive's employment is
terminated by the Company for reason (i) other than misconduct or (ii) due
to the sale of the operation for which the Executive had managing
responsibility, the Company shall pay to the Executive one year's salary
continuation and continue medical and dental benefits during such
continuation period. In the event that the operations for which the
Executive had management responsibility are transferred to a joint venture
or entity which is 50% or more controlled by the Company and the Executive
is employed by such entity, the Executive shall not be deemed terminated by
the Company for purposes of this paragraph.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any other agreements with the Company or any
of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program except as explicitly modified by
this Agreement.
<PAGE> 10
- 10 -
9. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof, plus
in each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Internal Revenue Code of l986, as amended (the
"Code").
10. OTHER AGREEMENTS. The parties agree that this Agreement supersedes and
replaces the Retention Agreement between the parties dated as of the 24th
day of October, 1997 and any and all other agreements, policies,
understandings or letters (including but not limited to employment
agreements, severance agreements and job abolishment policies) between the
parties related to the subject matter hereof.
11. RELEASE. Prior to receipt of the payment described in Section 6(d) the
Executive shall execute and deliver a Release to the Company as follows:
The Executive hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Company, its officers, directors,
stockholders, corporate affiliates, agents and employees from any and
all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings,
covenants, contracts, agreements, promises, doings, omissions,
damages, executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which he ever had
or now has against the Company, its officers, directors, stockholders,
corporate affiliates, agents and employees, including, but not limited
to, all claims arising out of his employment, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964,
42 U.S.C. ss.2000e ET SEQ., the Age Discrimination in Employment Act,
29 U.S.C., ss.621 ET SEQ., the Americans With Disabilities Act, 42
U.S.C., ss.12101 ET SEQ., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. ss.354-A:1 ET SEQ. and similar
state antidiscrimination laws, damages arising out of all employment
discrimination claims, wrongful discharge claims or other common law
claims and damages, provided, however, that nothing herein shall
release the Company from Executive's Stock Option Agreements. The
Release shall also contain, at a minimum, the following language:
The Executive acknowledges that he has been given twenty-one (21)
days to consider the terms of this Release and that the Company
advised him to consult with an attorney of his own choosing prior
to signing this Release. The Executive may revoke this Release
for a period of seven (7) days after the execution of the Release
and the Release shall not be effective or enforceable until the
expiration of this seven (7) day revocation period.
At the same time, the Company shall execute and deliver a Release to the
Executive as follows:
The Company hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Executive from any and all claims
which it ever had or now has against the Executive, other than for
intentional harmful acts.
12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity
for the benefit of the
<PAGE> 11
- 11 -
Company all secret or confidential information, knowledge or data relating
to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies
and which shall not be or become public knowledge (other than by acts by
the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 12 constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
13. ARBITRATION. Any controversy or claim arising out of this Agreement shall
be settled by binding arbitration in accordance with the commercial rules,
policies and procedures of the American Arbitration Association. Judgment
upon any award rendered by the arbitrator may be entered in any court of
law having jurisdiction thereof. Arbitration shall take place in Nashua,
New Hampshire at a mutually convenient location.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
15. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
IF TO THE EXECUTIVE:
John J. Ireland
27 Pine Street
<PAGE> 12
- 12 -
Exeter, NH 03833
IF TO THE COMPANY:
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03060
Attention: President
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof or the failure to assert any right the Executive may
have hereunder, including, without limitation, the right to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v), shall not
be deemed to be a waiver of such provision or right or any other
provision or right thereof.
(f) This Agreement contains the entire understanding of the Company and
the Executive with respect to the subject matter hereof. The Executive
and the Company acknowledge that the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, both the
Executive's employment and this Agreement may be terminated by either
the Company or the Executive at any time. In the event that this
Agreement is terminated by the Company prior to the Effective Date and
the Executive remains employed by the Company, the Executive would be
entitled to the same severance benefits as set forth in Section 7 of
this Agreement.
<PAGE> 13
- 13 -
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NASHUA CORPORATION EXECUTIVE
By /s/ Gerald G. Garbacz /s/ John J. Ireland
------------------------------------- ----------------------------
President and Chief Executive Officer Name: John J. Ireland
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<CURRENT-ASSETS> 45,770 88,536
<PP&E> 81,020 80,439
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