Exhibit
10(b)
CHANGE IN CONTROL EXECUTIVE
SEVERANCE AGREEMENT
This CHANGE IN CONTROL EXECUTIVE
SEVERANCE AGREEMENT (the “Agreement”) by and between
ADVO, Inc. (the “Company”) and [Name of Executive] (the
“Executive”), is effective as of [Date of
Hire].
RECITALS:
A. The Executive is an executive of
the Company and has made and is expected to continue to make major
contributions to the short- and long-term profitability, growth,
and financial strength of the Company;
B. The Company recognizes that the
possibility of a Change in Control (as hereafter defined)
exists;
C. The Company desires to assure
itself of both present and future continuity of its management and
desires to establish certain severance benefits for key executive
officers of the Company, including the Executive, applicable in the
event of a Change in Control; and
D. The Company wishes to aid in
assuring that such executives are not practically disabled from
discharging their duties in respect of a proposed or actual
transaction involving a Change in Control.
NOW, THEREFORE, the Company and the
Executive agree as follows:
1. Certain Defined Terms: In addition to
terms defined elsewhere herein, the following terms have the
following meanings when used in this Agreement with initial capital
letters:
(a) “Affiliate” means
(i) each entity in which the Company, alone or together with one or
more other Affiliates of the Company, owns not less than 80% of the
then outstanding voting securities or, for any entity that is not a
corporation, at least 80% of the then-outstanding capital interests
of such entity and (ii) any additional entity which is deemed by
action of the Board to be an Affiliate for the purposes of this
Agreement.
(b) “Base Pay” means the
Executive’s annual aggregate fixed base salary from the
Company at the time in question.
(c) “Board” means the
Board of Directors of the Company.
(d) “Change in Control”
means the occurrence during the Term of any of the following
events:
(i) Any Person (other than the
Company, any trustee or other fiduciary holding securities under
any employee benefit plan of
the Company, or any company owned, directly or
indirectly, by the stockholders of the Company immediately prior to
the occurrence with respect to which the evaluation is being made
in substantially the same proportions as their ownership of the
common stock of the Company) acquires securities of the Company and
immediately thereafter is the Beneficial Owner (except that a
Person shall be deemed to be the Beneficial Owner of all shares
that any such Person has the right to acquire pursuant to any
agreement or arrangement or upon exercise of conversion rights,
warrants or options or otherwise, without regard to the sixty day
period referred to in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company’s then
outstanding securities (except that an acquisition of securities
directly from the Company shall not be deemed an acquisition for
purposes of this clause (i));
(ii) During any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii) or
(iv) of this paragraph) whose election by the Board or nomination
for election by the Company’s stockholders was approved by a
vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the two-year period
or whose election or nomination for election was previously so
approved by excluding for this purpose any such new director whose
initial assumption of office occurs as a result of either an actual
or threatened election contest (as such terms as used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by
or on behalf of an individual, corporation, partnership, group,
associate or other entity or person other than the Board, cease for
any reason to constitute at least a majority of the
Board;
(iii) The consummation of a merger
or consolidation of the Company with any other entity, other than
(x) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or
resulting entity) more than 50% of the combined voting power of the
surviving or resulting entity outstanding immediately after such
merger or consolidation or (y) a merger or consolidation in which
no premium is intended to be paid to any shareholder participating
in the merger or consolidation;
(iv) The stockholders of the Company
approve a plan or agreement for the sale or disposition of all our
substantially all of the consolidated assets of the Company (other
than such a sale or disposition immediately after which such assets
will be owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
the common stock of the Company immediately prior to such sale or
disposition) in which case the Board shall determine the effective
date of the Change in Control resulting therefrom; or
(v) any other event occurs which the
Board determines, in its discretion, would materially alter the
structure or its ownership.
(e) “Cause” means that,
prior to any Termination by the Executive for Good Reason, the
Executive shall have:
(i) Committed an intentional act of
fraud, embezzlement or theft in connection with the
Executive’s duties or in the course of his employment with
the Company;
(ii) Committed intentional wrongful
damage to property of the Company; or
(iii) Intentionally and wrongfully
disclosed confidential information of the Company; and any such act
shall have been materially harmful to the Company.
For purposes of this Agreement, no
act on the part of the Executive shall be deemed
“intentional” if it was due primarily to an error in
judgment or negligence, but shall be deemed
“intentional” if done by the Executive in the absence
of good faith or without reasonable belief that the
Executive’s action or omission was in the best interests of
the Company.
(f) “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 if the Executive is Terminated by the
Company other than for Cause or for disability pursuant to Section
2(a)(ii), the Date of Termination will be the date on which the
Executive receives the Notice of Termination from the Company; and
provided further, if the Executive is Terminated by reason of death
or disability pursuant to Section 2(a)(I) or 2(a)(ii), the Date of
Termination will be he last day of the month in which occurs the
date of death or disability effective date, as the case may
be.
(g) “Employee Benefits”
means the prerequisites, benefits and service credit for benefits
as provided under the plans and programs maintained by the company,
including, but not limited to, plans and programs which are
“employee benefit plans” under Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, and
any amendment, or successor, to such plans or programs (whether
insured, funded or unfunded).
(h) “Good Reason” means
the occurrence of any of the events listed in Section 2(b)(i)
through 2(b)(vii), inclusive.
(i) “Incentive Pay”
means an annual amount equal to the aggregate annual bonus, in
addition to Base Pay, made or to be made in regard to services
rendered in any calendar year or performance period pursuant to any
bonus plan of the Company.
(j) “Notice of
Termination” means a written notice which (i) indicates the
specific provision in this Agreement relied upon, (ii)sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for the Termination under the provision so indicated, and
(iii) if the effective date of the Termination is other than the
date of receipt of such notice, specifies the effective date of
Termination (which date will not be more than sixty (60) days after
the giving of such notice). The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing that the Executive is entitled to the
benefits intended to be provided by this Agreement will not
constitute a waiver of any right of the Executive hereunder or
otherwise preclude the Executive from later asserting such fact or
circumstance in enforcing the Executive’s rights
hereunder.
(k) “Severance Period”
means the period of time commencing on the date of an occurrence of
a Change in Control and continuing until the earlier of (i) the
date which is one and one-half years following the occurrence of
the Change in Control, and (ii) the Executive’s
death.
(l) “Subsidiary” means
an entity, at least a majority of the total voting power of the
then-outstanding voting securities of which is held, directly or
indirectly, by the Company and/or one or more other Subsidiaries
or, for any entity that is not a corporation, at least a majority
of the then-outstanding capital interests of which is so
held.
(m) “Term” means (A) the
period commencing on the date hereof and ending on the second
anniversary of the date hereof; 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 shall be hereinafter referred to as the “Renewal
Date”, unless previously terminated, the Term shall be
automatically extended so as to terminate two years from such
Renewal Date, unless at least sixty (60) days prior to the Renewal
Date the company shall give notice to the Executive that the Term
shall not be so extended, (B) except as otherwise provided in this
Agreement, if, prior to a Change in Control, for any reason the
Executive is Terminated or Terminates, thereupon without further
action the Term shall be deemed to have expired and this Agreement
will immediately terminate and be of no further effect, and (C) in
the event of a Change in Control the Term will, without further
action, be considered to terminate at the expiration of the
Severance Period.
(n) “Terminate” and
correlative terms mean the termination of the Executive’s
employment with the Company and any Affiliate or
Subsidiary.
2. Termination in Connection With a Change in
Control:
(a) If, during the Severance Period,
the Executive is Terminated, the Executive will be entitled to the
benefits provided by Sections 3 and 4 unless such termination is by
reason of one or more of the following events:
(i) The Executive’s
death;
(ii) The permanent and total
disability of the Executive as defined in any long term disability
plan of the Company, applicable to the Executive, as in effect
immediately prior to the Change in Control;
(iii) Cause; or
(iv) The Executive’s voluntary
Termination in circumstances in which Good Reason does not
exist.
(b) In the event of the occurrence
of a Change in Control, the Executive may Terminate during the
Severance Period with the right to severance compensation as
provided in Sections 3 and 4 upon the occurrence of one or more of
the following events (regardless of whether any other reason, other
than Cause as herein above provided, for Termination exists or has
occurred, including without limitation other
employment):
(i) An adverse change in the nature
or scope of the authorities, powers, functions, responsibilities,
or duties attached to the position with the Company, which the
Executive held immediately prior to the Change in
Control;
(ii) A reduction in the
Executive’s Base Pay as in effect immed
