Exhibit 10.6
CHANGE IN CONTROL
AGREEMENT
This Change in Control Agreement
(this “ Agreement ”), dated as of March
15, 2005, is between Captaris, Inc., a Washington corporation (the
“ Company ”), and Matthias Scheuing (the
“ Executive ”).
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 ensure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change in Control (as defined in
Appendix A to this Agreement, which is incorporated
herein by this reference) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Executive
arising from the personal uncertainties and risks created by a
pending or threatened Change in Control, to encourage the
Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change in
Control, and to provide the Executive with reasonable compensation
and benefits arrangements upon a Change in Control.
In order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
1. EMPLOYMENT
1.1 Certain Definitions
(a) “ Change in Control
Date ” shall mean the first date during the Term of
Agreement (as defined in Section 1.1(b)) on which a Change in
Control occurs.
(b) “ Term of
Agreement ” shall mean an initial period commencing
on the date hereof and ending 18 months after the date hereof;
provided , however , that commencing on the date that
is 12 months after the date hereof, and on each annual anniversary
of such date (such date and each annual anniversary thereof shall
be hereinafter referred to as the “ Renewal
Date ”), the Term of Agreement shall be automatically
extended so as to terminate 18 months from such Renewal Date,
unless prior to the Renewal Date the Company shall give notice to
the Executive that the Term of Agreement shall not be so
extended.
1.2 Post-Change in Control Period
The Company hereby agrees to
continue the Executive in its employ or in the employ of its
affiliated companies, and the Executive hereby agrees to remain in
the employ of the Company or its affiliated companies, in
accordance with the terms and provisions of this Agreement, for the
period commencing on the Change in Control Date and ending 12
months after such date (the “ Post-Change in Control
Period ”).
1.3 Position and Duties
During the Post-Change in Control
Period, the Executive’s position, authority, duties and
responsibilities shall be reasonably commensurate with the most
significant of those held, exercised and assigned at any time
during the 90-day period immediately preceding the Change in
Control Date.
1.4 Location
During the Post-Change in Control
Period, the Executive’s services shall be performed at any
office located no more than 50 miles from the office where
Executive was performing services as of the Change in Control
Date.
1.5 Employment at Will
The Executive and the Company
acknowledge that, except as may otherwise be provided under any
other written agreement between the Executive and the Company, the
employment of the Executive by the Company or its affiliated
companies is “at will” and, prior to the Change in
Control Date, may be terminated by either the Executive or the
Company or its affiliated companies for any reason and at any time.
Moreover, if prior to the Change in Control Date, the
Executive’s employment with the Company or its affiliated
companies terminates for any reason, then the Executive shall have
no further rights under this Agreement.
1.6 Board of Directors
If the Executive is or becomes a
member of the Board, his or her continuation as such shall be
subject to the will of the Company’s shareholders and the
Board, as provided in the Company’s bylaws and articles of
incorporation. Therefore, removal of the Executive from, or
nonelection of the Executive to, the Board by the Company’s
shareholders or the Board, as provided in the Company’s
bylaws and articles of incorporation, shall in no event be deemed a
breach of this Agreement by the Company.
2. ATTENTION AND
EFFORT
During the Post-Change in Control
Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive will devote all of
his or her productive time, ability, attention and effort to the
business and affairs of the Company and the discharge of the
responsibilities assigned to him/her hereunder, and will use his or
her best efforts to perform such responsibilities faithfully and
efficiently. It shall not be a violation of this Agreement for
the
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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 in accordance with this
Agreement. It is expressly understood and agreed that to the extent
any such activities have been conducted by the Executive prior to
the Post-Change in Control Period, the continued conduct of such
activities (or the conduct of activities similar in nature and
scope thereto) during the Post-Change in Control Period shall not
thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.
3. COMPENSATION
During the Post-Change in Control
Period, the Company agrees to pay or cause to be paid to the
Executive, and the Executive agrees to accept in exchange for the
services rendered hereunder by him/her, the following
compensation:
3.1 Salary
The Executive shall receive an
annual base salary (the “ Annual Base Salary
”), at least equal to the annual salary established by the
Board or the Compensation Committee of the Board (the “
Compensation Committee ”) for the fiscal year
in which the Change in Control Date occurs. The Annual Base Salary
shall be paid in substantially equal installments and at the same
intervals as the salaries of other officers of the Company are
paid. During the Post-Change in Control Period, the Board or the
Compensation Committee shall review the Annual Base Salary at least
annually and shall determine any increases in future
years.
3.2 Bonus
In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Post-Change in Control Period, an annual bonus in cash at least
equal to the Executive’s target bonus amount for the fiscal
year in which the Change in Control Date occurs; provided, however,
that for the fiscal year in which the Change in Control Date
occurs, the Executive shall be awarded a bonus in cash at least
equal to the annualized bonus amount that Executive is on pace for
as of the Change in Control Date (the “ Annual
Bonus ”). Each such Annual Bonus shall be paid no
later than 90 days after the end of the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer
the receipt of such Annual Bonus. Notwithstanding the foregoing, in
the event the fiscal year end is different prior to the Post-Change
in Control Period than it is after the Post-Change in Control
Period, then the Annual Bonus paid to the Executive for the fiscal
year in which the Change in Control Date occurs shall be paid no
later than 90 days after the new fiscal year end and shall be
proportionately adjusted to reflect additional days or less days in
the new fiscal year as a result of the difference in fiscal
years.
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4. BENEFITS
4.1 Incentive, Retirement and Welfare Benefit
Plans; Vacation
During the Post-Change in Control
Period, the Executive shall be entitled to participate, subject to
and in accordance with applicable eligibility requirements, in such
fringe benefit programs as shall be provided to other executives of
the Company and its affiliated companies from time to time during
the Post-Change in Control Period by action of the Board (or any
person or committee appointed by the Board to determine fringe
benefit programs and other emoluments), including, without
limitation, paid vacations; any incentive, savings and retirement
plan, practice, policy or program; and all welfare benefit plans,
practices, policies and programs (including, without limitation,
medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident
insurance plans and programs).
4.2 Expenses
During the Post-Change in Control
Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by
him/her in accordance with the policies, practices and procedures
of the Company and its affiliated companies in effect for the
executives of the Company and its affiliated companies during the
Post-Change in Control Period.
5. TERMINATION
Employment of the Executive during
the Post-Change in Control Period may be terminated as
follows:
5.1 By the Company or the
Executive
Upon giving Notice of Termination
(as defined below), the Company may terminate the employment of the
Executive with or without Cause, and the Executive may terminate
his or her employment for Good Reason or for any reason, at any
time during the Post-Change in Control Period. “
Cause ” and “ Good Reason
” are as defined in Appendix A to this
Agreement.
5.2 Automatic Termination
This Agreement and the
Executive’s employment during the Post-Change in Control
Period shall terminate automatically upon the death or Total
Disability of the Executive. The term “ Total
Disability ” as used herein shall mean the
Executive’s
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inability (with or without such accommodation as
may be required by law and which places no undue burden on the
Company), as determined by a physician selected by the Company and
acceptable to the Executive, to perform the duties set forth
hereunder for a period or periods aggregating 120 calendar days in
any 12-month period as a result of physical or mental illness, loss
of legal capacity or any other cause beyond the Executive’s
control, unless the Executive is granted a leave of absence by the
Board.
5.3 Notice of Termination
Any termination by the Company or by
the Executive during the Post-Change in Control Period shall be
communicated by Notice of Termination to the other party given in
accordance with Section 10 hereof. The term “ Notice of
Termination ” shall mean a written notice which (a)
indicates the specific termination provision in this Agreement
relied upon and (b) 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. The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive’s or the
Company’s rights hereunder.
5.4 Date of Termination
During the Post-Change in Control
Period, the term “ Date of Termination ”
shall mean (a) if the Executive’s employment is terminated by
reason of death, at the end of the calendar month in which the
Executive’s death occurs, (b) if the Executive’s
employment is terminated by reason of Total Disability, immediately
upon a determination by the Company of the Executive’s Total
Disability, and (c) in all other cases, ten days after the date of
mailing or personal delivery of the Notice of Termination. The
Executive’s employment and performance of services will
continue during such ten-day period; provided ,
however , that the Company may, upon notice to the Executive
and without reducing the Executive’s compensation during such
period, excuse the Executive from any or all of his or her duties
during such period.
6. TERMINATION
PAYMENTS
In the event of termination of the
Executive’s employment during the Post-Change in Control
Period, all compensation and benefits set forth in this Agreement
shall terminate except as specifically provided in this Section
6.
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6.1 Termination by the Company for Other Than
Cause or by the Executive for Good Reason
If the Company terminates the
Executive’s employment other than for Cause or the Executive
terminates his or her employment for Good Reason prior to the end
of the Post-Change in Control Period, the Executive shall be
entitled to:
(a) receive payment of the following
accrued obligations (the “ Accrued Obligations
”):
(i) the Executive’s Annual
Base Salary through the Date of Termination to the extent not
theretofore paid;
(ii) the product of (x) the Annual
Bonus payable with respect to the fiscal year in which the Date of
Termination occurs 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) any compensation previously
deferred by the Executive (together with accrued interest or
earnings thereon, if any) and any accrued vacation pay, in each
case to the extent not theretofore paid;
(b) reimbursement of
Executive’s COBRA expenses for Executive and his family for a
period of 12 months, or until such time as Executive obtains new
health insurance coverage, whichever occurs first.;
(c) (i) base salary continuation,
payable in the course of the Company’s regularly scheduled
payroll and subject to normal withholdings, for a period of time
equal to 12 months and (ii) an amount, paid as a lump sum, equal to
one times the target Annual Bonus payable for the fiscal year in
which the Date of Termination occurs;
(d) immediate vesting of all stock
options granted by the Company to the Executive outstanding as of
the Change in Control Date; and
(e) an extension of the
post-termination exercise period of all stock options granted by
the Company to the Executive outstanding as of the Change in
Control Date, so that such options shall be exercisable for a
period of one year from the Date of Termination.
6.2 Termination for Cause or Other Than for Good
Reason
If the Executive’s employment
shall be terminated by the Company for Cause or by the Executive
for other than Good Reason during the Post-Change in Control
Period, this Agreement shall terminate without further obligation
to the Executive
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other than the obligation to pay to the
Executive his or her 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.
6.3 Expiration of Term
In the case of a termination of the
Executive’s employment as a result of the expiration of the
term of this Agreement, the Executive shall not be entitled to
receive any payments hereunder, other than the Accrued
Obligations.
6.4 Termination Because of Death or Total
Disability
If the Executive’s employment
is terminated by reason of the Executive’s death or Total
Disability during the Post-Change in Control
