Amount
of Severance Pay – General
The
amount of severance pay provided for terminations in the ordinary course
(i.e.,
not upon, or within two (2) years after, a Change of Control) will be calculated
based on the following schedule:
|
Tier
|
Amount
of Severance
|
|
Tier
I
|
24
months of base salary plus two years of bonus
|
|
Tier
II
|
21
months of base salary plus one year of bonus
|
|
Tier
III
|
18
months of base salary plus one year of
bonus
|
For
purposes of the above schedule, “
base salary
” shall be
determined as of the date of the employee’s termination of employment and
“
bonus
” shall be based on target bonus for the year of the
employee’s termination. Severance shall be paid in accordance with the Company’s
regular payroll schedule and, except as provided below, shall commence on
the
first payroll date following the date on which the separation letter and
release
and waiver of claims described hereinafter becomes irrevocable. The
amount of each severance payment shall be determined by adding the amount
of
base salary and bonus payable to the Participant as severance and then dividing
that sum by the number of payroll dates during the applicable 18, 21 or 24
month
severance period.
Six-Month
Delay
To
the
extent amounts payable under this Plan (after giving full effect to any pro
rata
bonus payments and any amounts accrued under the Company’s retirement plans
relating to a post-Change of Control separation from service), together with
any
other payments or benefits that are considered “deferred compensation”, are
payable only on account of, and are in fact paid on account of, an “involuntary
separation from service” (as defined in Treasury Regulation Section
1.409A-1(n)), (the “involuntary separation payments”), the Executive Officer
shall receive, during the six (6)-month period immediately following the
Executive Officer’s date of termination, payments of only such amounts of
involuntary separation payments as do not exceed lesser of (x) the total
involuntary separation payments, or (y) two times the compensation limit
in
effect under Code Section 401(a)(17) for the calendar year in which the date
of
termination occurs (with any amounts that otherwise would have been payable
under this Plan during such six (6)-month period being paid on the first
regular
payroll date following the six (6)-month anniversary of the date of
termination). To the extent amounts payable hereunder are not payable
only on an “involuntary separation from service” (as so defined) or if the
Company reasonably determines that such termination is not an “involuntary
separation from service” (as so defined), amounts that would otherwise have been
paid during the six (6)-month period immediately following the date of
termination shall be paid on the first regular payroll date immediately
following the six (6)-month anniversary of the date of termination.
Amount
of Severance Pay – Change of Control
If
an
Executive Officer’s employment is terminated by the Company without “cause” (as
defined above) or by Executive Officer for “good reason” (as defined below)
within 24 months following a Change of Control of the Company, or if such
termination precedes a Change of Control and the Executive reasonably
demonstrates such termination (or event constituting “good reason”) was either
(i) at the request of a third party who was taking steps reasonably calculated
to effect a Change of Control or (ii) otherwise in contemplation of a Change
of
Control, and a Change of Control actually occurs, the General schedule regarding
severance pay (above) will not apply and severance pay will be determined
under
this Change of Control Section.
“
Change
of Control
” shall have the meaning ascribed to such term as of December
1, 2007 in the Amended and Restated ACCO Brands Corporation 2005 Incentive
Plan,
as amended from time to time, or any successor plan thereto, except that
for
purposes of this Plan the percentage stated in Sec. 13(b)(i)(A) of said Plan
shall be 30%.
“
Good
Reason
” shall mean the occurrence of any of the following upon, or
within two (2) years after, the occurrence of a Change of Control of the
Company, without Executive Officer’s prior written consent:
(i) (A)(I)
any material reduction in the duties, responsibilities and/or authority assigned
to Executive Officer, (II) the assignment to Executive Officer of any duties,
responsibilities or authority inconsistent with the duties, responsibilities
and
authority assigned to Executive Officer prior to the Change of Control, or
(III)
a material change in Executive Officer’s reporting responsibilities, titles,
offices or other positions, other than an insubstantial and inadvertent
reduction that is remedied by the Company immediately after receipt of notice
thereof given by Executive Officer; or (B) any removal of Executive Officer
from, or any failure to re-elect Executive Officer to, any of such positions,
except in connection with the termination of Executive Officer’s employment as a
result of Executive Officer’s death or disability, by Company for Cause or by
Executive Officer other than for Good Reason; provided, however, that with
respect to the Chairman and Chief Executive Officer, Good Reason shall not
exist
because the Board of Directors divides the roles of Chairman and Chief Executive
Officer between two individuals;
(ii) (A)
any significant reduction (more than 1% of total targeted cash compensation)
in
Executive Officer’s cash compensation (base salary plus target bonus
opportunity), (B) a substantial reduction in the benefits provided to Executive
Officer and/or (C) any failure to timely pay any part of Executive Officer’s
compensation when due (including base salary and bonus) or any benefits due
under any benefit plan, program or arrangement; provided, however, that
Company-initiated across-the-board reductions in compensation or benefits
affecting substantially all Company employees shall alone not be considered
“good reason,” unless the compensation reductions exceed ten percent (10%) of
Executive Officer’s cash compensation (base salary plus target bonus
opportunity);
(iii) the
failure of the Company to continue in effect, or the failure to continue
Executive Officer’s participation on substantially the same basis in, any of the
Company’s short-
term
or
long-term incentive compensation plans or equivalent plans of the Company
following a Change of Control unless agreed to by the Executive
Officer;
(iv) the
failure of the Company to obtain a satisfactory agreement from any successor
to
Company to assume and agree to perform the Company’s obligations under this
Agreement;
(v) a
material breach of this Agreement by the Company which is not remedied by
the
Company within ten (10) business days of receipt of written notice of such
breach delivered by Executive Officer to the Company; or
(vi) the
Company’s requiring Executive Officer to be based at a location that is in
excess of fifty (50) miles from the location of Executive Officer’s principal
job location or office immediately prior to the Change of Control, except
for
required travel on the Company’s business to an extent substantially consistent
with Executive Officer’s then present business travel obligations.
For
purposes of sections (i)(A)(I) through (III) above, the duties, responsibilities
and/or authority assigned to Executive Officer shall be deemed to be the
greatest of those in effect during the four (4) month period prior to or
during
the two (2) years after the Change of Control. Unless Executive
Officer becomes disabled, Executive Officer’s right to terminate Executive
Officer’s employment for Good Reason shall not be affected by Executive
Officer’s incapacity due to physical or mental illness. Executive
Officer’s continued employment shall not constitute consent to, or a waiver or
rights with respect to, any circumstance constituting Good Reason.
The
amount of severance pay provided for terminations following a Change of Control
will be calculated based on the following schedule:
|
Tier
|
Amount
of Severance
|
|
Tier
I
|
2.99
times base salary
plus
2.99 times bonus
|
|
Tier
II
|
2.25
times base salary
plus
2.25 times bonus
|
|
Tier
III
|
2
times base salary
plus
2 times bonus
|
For
purposes of the above schedule, “
base salary
” shall be
determined as of the date of Executive Officer’s termination of employment and
“
bonus
” shall be based on the greater of (i) target bonus for
the year of Executive Officer’s termination, or (ii) the bonus that would be
paid using the Company’s most recent financial performance outlook report that
is available as of Executive Officer’s termination date.
Payment
of Severance
An
Executive Officer will receive payment of severance resulting from a Change
of
Control that is also a change in the ownership or effective control of the
Company (as defined in
Treasury
Regulation §1.409A-3(i)(5)) in a single lump sum payment as soon as
administratively practicable following the Executive Officer’s date of
termination and the date on which the separation letter and release and waiver
of claims described hereinafter becomes irrevocable. If the Change of
Control is not also a change in the ownership or effective control of the
Company (as so defined), the Executive Officer will receive payment in the
form
provided under Amount of Severance Pay - General. In either event,
payment is subject to the requirements of the Six Month Delay provision of
the
Plan, and to normal payroll taxes and required withholding, and deductions
for
applicable medical, dental and flexible spending account coverage, and, upon
payment, may be immediately applied to pay any amounts the employee owes
the
Company. If an Executive Officer dies after signing the separation
letter and release and waiver of claims but before receipt of severance pay,
payment will be made to the Executive Officer’s estate.
Pro
Rata Bonus
If
an
Executive Officer is receiving Change of Control severance, he or she shall
also
be entitled to a pro rata bonus for the year of the Executive Officer’s
termination with the amount of the full year bonus determined as above (Amount
of Severance – Change of Control) and multiplied by a fraction, the numerator of
which is the number of days elapsed during the year of the Executive Officer’s
termination (to and including the date of termination), and the denominator
of
which is 365.
Benefit
Coverage
Medical,
dental and vision coverage will continue at active employee rates for so
long as
the Executive Officer is receiving severance benefits (or over the period
for
which severance is calculated). Thereafter, the continuation coverage
period under the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) will start, and the Executive may continue such coverage at standard
COBRA rates. All other employee benefit plans terminate on the
Executive Officer’s date of termination. Severance payments will not
be considered eligible earnings under the Company’s pension and 401(k) plans,
and the period of severance will not count towards credited service and vesting
severance under the Company’s pension and 401(k) plans.
If
during
the Severance Period a former Executive Officer accepts employment with a
new
employer, any medical and dental benefits provided under the Company’s plans at
the employee contribution rates pursuant to the preceding paragraph will
be
discontinued when the former employee is eligible for coverage under the
new
employer’s plans. Coverage may be continued at standard COBRA rates
only in accordance with the COBRA provisions of the Company’s medical, dental
and vision plans. A former employee must notify the Human Resources
Department in writing when he or she obtains coverage under a new employer’s
plans.
Retirement
Benefits
If
an
Executive Officer is receiving Change of Control severance, and is an active
participant in the Company’s defined contribution retirement plan as of the date
of his or her termination, the Company shall pay the Executive an additional
amount equal to the amount of Company contributions (match and retirement
contributions) that would have been contributed to the plan over the period
that
Change of Control severance is calculated. The amount of
matching
contributions
shall be equal to the maximum matching percentage under the plan as of the
date
of termination, and the amount of the Company retirement contribution shall
be
based on the greatest such contribution (as a percentage of pay) for the
three
(3) plan years immediately preceding the Change of Control.
If
an
Executive Officer is receiving Change of Control severance, and is an active
participant in the Company’s defined benefit pension plan as of the date of his
or her termination, then in addition to the retirement benefits to which
the
Executive is entitled under the Company’s qualified and non-qualified defined
benefit pension plans (collectively “Pension Plans”), the Company shall pay the
Executive monthly an amount equal to the excess of (i) over (ii) below
where
(i) equals
the sum of the aggregate monthly amounts of pension benefits (determined
as a
straight life annuity) to which the Executive would have been entitled under
the
terms of the Pension Plans in which he was an active participant as of the
date
of termination determined as if he were fully vested thereunder and had
accumulated additional years equal to the period of time over which Change
of
Control severance is calculated, and where
(ii) equals
the sum of the aggregate monthly amounts of pension payments (determined
as a
straight life annuity) to which the Executive is entitled under the terms
of
each of the Pension Plans in which he was an active participant at the date
of
the Change of Control.
For
purposes of clause (i), the amount of Change of Control severance pay shall
be considered as part of the Executive’s final average earnings under the
non-qualified pension plan. The supplemental pension benefits
determined under this Plan shall be payable by the Company to the Executive
in
the same manner and for as long as his pension benefits under the Company’s
non-qualified pension plan and shall be adjusted actuarially to reflect payment
in a form other than a straight life annuity. Benefits which commence
prior to normal retirement age shall be actuarially reduced to reflect early
commencement to the extent, if any, provided in the Company’s non-qualified
pension plan.
Outplacement
If
an
Executive Officer is receiving any severance benefits under this Plan, he
or she
shall also be entitled to receive outplacement assistance with a provider
chosen
by the Company for a value of up to the amount set forth in the following
table:
|
Tier
|
Amount
of Outplacement
|
|
Tier
I
|
$60,000
|
|
Tiers
II & III
|
$30,000
|
Only
those outplacement services incurred before the end of the second calendar
year
after the year during which the separation from service occurred shall be
reimbursed under this Plan.
Vacation
Executive
Officers will receive pay for all unused and accrued vacation for the year
of
termination as a part of their final regular pay. Payment will be
made in conformance with prevailing state laws.
Other
Company Payments
Notwithstanding
any provision of this Plan to the contrary, the severance benefits under
this
Plan shall be reduced, but not below zero, by the severance benefits then
payable to an Executive Officer under any other agreement, understanding,
plan,
policy, program or arrangement of the Company or a subsidiary or affiliate
of
the Company in effect or in force at the time of the Executive Officer’s
termination of employment
.
; provided, however, that such offset
shall not operate to accelerate or defer the payment of any deferred
compensation subject to Code Section 409A.
Excise
Tax Gross-Up
If
the
Executive Officer becomes subject to the excise tax imposed by Code Section
4999
(the “Parachute Excise Tax”), the Company and Executive Officer agree
that:
(i) If
the aggregate of all “parachute payments” (as such term is used under Code
Section 280G) does not exceed 330% of the “base amount” (as such term is used
under Code Section 280G), then the parachute payment shall be reduced to
299.99%
of such base amount;
(ii) If
the aggregate of all parachute payments exceeds 330% of the base amount,
then
the Company shall pay to Executive Officer a tax gross-up payment so that
after
payment by or on behalf of Executive Officer of all federal, state, and local
excise, income, employment, Medicare and any other taxes (including any related
penalties and interest) resulting from the payment of the parachute payments
and
the tax gross-up payments to Executive Officer by the Company, Executive
Officer
retains on an after-tax basis an amount equal to the amount that Executive
Officer would have retained if Executive Officer had not been subject to
the
Parachute Excise Tax;
(iii) The
computation of the excess parachute payment in accordance with Code Section
280G
shall be done by a nationally recognized and reputable independent accounting
or
valuation firm selected and paid for by the Company;
(iv) Executive
Officer shall notify the Company in writing of any claim by the Internal
Revenue
Service that, if successful, would require the payment by the Company of
any tax
gross-up payments. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Executive Officer
is
informed in writing of such claim and shall apprise Company of the nature
of
such claim and the date on which such claim is requested to be
paid. The Executive Officer shall not pay such claim prior to the
expiration of the thirty (30)-day period following the date on which Executive
Officer gives such notice to the Company (or such shorter period ending on
the
date that any payment of taxes with respect to such claim is
due). If the Company notifies Executive Officer in writing
prior to the expiration of such period that it desires to contest such claim,
Executive Officer shall:
(A) give
the Company any information reasonably requested by the Company relating
to such
claim,
(B) take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(C) cooperate
with the Company in good faith in order effectively to contest such claim,
and
(D) permit
the Company to participate in any proceedings relating to such
claim;
provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with
such
contest and shall indemnify and hold Executive Officer harmless, on an after-tax
basis, for any excise tax or income tax (including interest and penalties
with
respect thereto) imposed as a result of such representation and payment of
costs
and expenses. Without limitation on the foregoing provisions of this
section of the Plan shall control all proceedings taken in connection with
such
contest and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority
in
respect of such claim and may, at its sole option, either direct Executive
Officer to pay the tax claimed and sue for a refund or contest the claim
in any
permissible manner, and Executive Officer agrees to prosecute such contest
to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive Officer
to
pay such claim and sue for a refund, the Company shall advance the amount
of
such payment to Executive Officer, on an interest-free basis and shall indemnify
and hold Executive Officer harmless, on an after-tax basis, from any excise
tax
or income tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive
Officer with respect to which such contested amount is claimed to be due
is
limited solely to such contested amount. Furthermore,
the Company’s control of the contest shall be limited to issues with
respect to which a gross-up payment would be payable hereunder and Executive
Officer shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority;
and
(E) If,
after the receipt by Executive Officer of an amount advanced by the Company
pursuant to this Section of the Plan, Executive Officer becomes entitled
to
receive any refund with respect to such claim, Executive Officer shall (subject
to the Company’s complying with the requirements of this Section) promptly pay
to the Company the amount of such refund (together with any interest paid
or
credited thereon after taxes applicable thereto). If, after the
receipt by Executive Officer of an amount advanced by the Company pursuant
to
this Section, a determination is made that Executive Officer shall not be
entitled to any refund with respect to such claim and the
Company
does not notify Executive Officer in writing of its intent to contest such
denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required
to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of gross-up payment required to be paid.
Release
of Claims
In
no
event will an Executive Officer be eligible for General or Change of Control
severance benefits under this Plan until the Executive Officer signs a
separation letter along with a release and waiver of claims in the form proposed
by the Company; provided that such release and waiver of claims must be
presented by the Company to the Executive Officer within 14 days after the
Executive Officer’s separation from service and must be executed and become
irrevocable no later than the earlier to occur of the date set forth in such
release or 90 days after such separation from service.
Legal
Fees
All
reasonable costs and expenses (including fees and disbursements of
counsel) incurred by Executive Officer in seeking to interpret this Plan or
enforce rights pursuant to this Plan shall be paid on behalf of or reimbursed
to
Executive Officer promptly by the Company, if Executive Officer is successful
in
asserting such rights. The Executive Officer may waive such payment
for tax or any other reasons.
Administration
This
Plan
shall be administered by the Compensation Committee of the Board of Directors
or
any comparable committee designated to do so by the Board (the “Plan
Administrator”). The Plan Administrator may designate persons to
carry out its responsibilities under this Plan.
Amendment
and Termination
The
statements contained in this Plan are not intended to create nor are they
to be
construed to constitute conditions of employment or a contract of employment
between the Company and any employee. Except as provided in the
following sentence, the Company reserves the right to modify, suspend or
terminate the Plan or the benefits provided at any time without prior notice
to
any Executive Officer. Solely with respect to the provisions under
“Amount of Severance Pay – Change of Control”, no amendment or termination of
such provisions will be effective until 24 months following the date a notice
of
such amendment or termination is provided to Executive Officers of the
Company.
Benefit
Claim Process
The
Company will notify Executive Officers of any amounts of severance benefits
payable under this Plan. If an Executive Officer does not receive
severance pay benefits within 60 days (or such later date as required under
Code
Section 409A) of his or her date of termination, he or she may assume that
the
Plan Administrator has determined that such
Executive
Officer is not eligible for severance pay benefits. If any Executive
Officer believes that he or she has been denied severance pay benefits to
which
he or she may be entitled, the Executive Officer should submit a written
claim
for severance pay benefits to the Chairman of the Plan
Administrator. The Chairman of the Plan Administrator will notify the
employee of any claim for severance pay that is denied, in whole or in part,
within 30 days of the date the claim is received (unless special circumstances
required additional time for processing the claim).
OTHER
TERMS
:
No
Vesting
No
provision of this Plan shall be construed as giving rise to or granting any
vested right to receive severance benefits.
Code
Section 409A
To
the
extent applicable, it is intended that this Plan shall comply with the
provisions of Code Section 409A, and this Plan shall be construed and applied
in
a manner consistent with this intent. In the event that any payment
or benefit under this Plan is determined by the Company to be in the nature
of a
deferral of compensation, then unless otherwise provided, the Company shall
take
such actions as it reasonably determines to ensure that such payments comply
with the applicable provisions of Code Section 409A and the Treasury Regulations
thereunder.
Effective
Date
:
DECEMBER 1,
2007
