Exhibit 10.3


 


COURIER CORPORATION


 


SENIOR EXECUTIVE SEVERANCE PROGRAM


 


As Amended and Restated December 5, 2005


 


1.                                       Purpose.  The Corporation’s Board of
Directors has determined that it is appropriate to reinforce and encourage the
continued attention and dedication of senior members of the Corporation’s
management to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change in control of
the Corporation.  This Program sets forth
the severance compensation which the Corporation agrees it will pay to an
executive named herein (an “Executive,” and collectively, the “Executives”), in
the event that his employment with the Corporation terminates under the
circumstances described in Section 6 hereof following a Change in Control
of the Corporation, as defined herein.


 


2.                                       Change in Control.  No
compensation shall be payable under this Program to any Executive unless and
until his employment with the Corporation has terminated after a Change in
Control of the Corporation that occurs during his employment with the
Corporation.  For purposes of this
Program, a Change in Control of the Corporation shall be deemed to have
occurred if:


 


(i)                                     there is (x) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation’s Common Stock would be converted into cash, securities or other
property, other than a consolidation or merger of the Corporation in which the
holders of the Corporation’s Common Stock immediately prior to the consolidation
or merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the consolidation or merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation, or


 


(ii)                                  the stockholders of
the Corporation approve any plan or proposal for the liquidation or dissolution
of the Corporation, or


 


(iii)                               any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) other than a trust related to an
employee benefit plan maintained by the Corporation becomes the beneficial
owner (within the meaning of Rule 13d-d under the Exchange Act) of 20% or
more of the Corporation’s outstanding Common Stock, and within the period of 24
consecutive months immediately thereafter the conditions of paragraph (iv) are
fulfilled, or


 


(iv)                              during any period of 24
consecutive months, individuals other than (x) individuals who at the beginning
of such period constitute the entire Board of Directors or (y) individuals
whose election, or nomination for election by the


 





















 


Corporation’s stockholders, was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period, become a majority of the Board of Directors.


 


3.                                       Termination Following Change in Control.  If a
Change in Control of the Corporation occurs while an Executive is an employee
of the Corporation, he shall be entitled to the compensation and benefits
provided in Sections 6 and 7 hereof upon the subsequent termination of his
employment with the Corporation resulting from any reason other than the
Executive’s death, Disability, termination by the Corporation for Cause, or the
Executive’s decision to terminate his employment other than for Good Reason
(all as defined below).


 


(a)                                  Disability.  If as a result of incapacity due to physical
or mental illness an Executive is absent from his duties with the Corporation
on a full-time basis for six months, and does not return to the full-time
performance of his duties within 30 days after a Notice of Termination is
delivered to him by the Corporation in accordance with Section 4 hereof,
the Corporation may terminate his employment for Disability.


 


(b)                                 Cause.  The Corporation may terminate an Executive’s
employment for Cause only in the event that there shall have been delivered to
the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Corporation’s
Board of Directors, at a meeting of the Board called and held for the purpose
(after reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board the Executive was guilty of fraud,
misappropriation or embezzlement involving the Corporation, and specifying the
particulars thereof in detail.


 


(c)                                  Good
Reason.  An Executive may terminate
his employment for Good Reason, which term shall mean the occurrence of any of
the following without the Executive’s express written consent:


 


(i)                                     the assignment to
the Executive by the Corporation of duties inconsistent with and inferior to
his position, duties, responsibilities and status with the Corporation
immediately before a Change in Control of the Corporation; or a deleterious
change in the Executive’s titles or offices as in effect immediately before a
Change in Control of the Corporation; or any removal of the Executive from, or
failure to reelect the Executive to, any of such positions, except in
connection with the termination of his employment for Disability, or Cause, or
as a result of the Executive’s death, or by the Executive other than for Good
Reason;


 


(ii)                                  a reduction by the
Corporation in the Executive’s base salary as in effect on the date hereof or
as the same may be increased from time to time hereafter, or the Corporation’s
failure after a Change in Control of the Corporation to increase the Executive’s
base salary, within 12 months of the Executive’s last increase in base salary,
in an amount which is at least 50% of the average percentage increase in base
salary for all officers of the Corporation effected in the preceding 12 months;


 


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(iii)                               any failure by the
Corporation to continue in effect any benefit plan or arrangement (including,
without limitation, its Profit Sharing and Savings Plan, Employee Stock
Ownership Plan, Group Health Program, Basic Life Insurance Plan, Supplemental
Life Insurance Plan, Accidental Death and Dismemberment Insurance Plan,
Business Travel Accident Insurance Plan, Long Term Disability Plan, and Salary
Continuation Plan) in which the Executive is participating at the time of a
Change in Control of the Corporation, or any other plans providing the
Executive with substantially similar benefits (“Benefit Plans”), or the taking
of any action by the Corporation which would adversely affect the Executive’s
participation in or materially reduce his benefits under any Benefit Plan, or
deprive him of any material fringe benefit enjoyed by him at the time of a
Change in Control of the Corporation;


 


(iv)                              any failure by the
Corporation to continue in effect any incentive plan or arrangement (including,
without limitation, its Executive Compensation Program) in which the Executive
is participating at the time of a Change in Control of the Corporation, or any
other plans or arrangements providing him with substantially similar benefits (“Incentive
Plans”), or the taking of any action by the Corporation which would adversely
affect the Executive’s participation in any Incentive Plan or reduce his
benefits under any Incentive Plan, expressed as a percentage of the total
benefits awarded under the Incentive Plans as a group, by more than 10
percentage points in any fiscal year as compared to the immediately preceding
fiscal year;


 


(v)                                 any failure by the
Corporation to continue in effect any plan or arrangement to receive securities
of the Corporation (including, without limitation, the Corporation’s 1983 Stock
Option Plan and any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, restricted stock or grants thereof) in
which the Executive is participating at the time of a Change in Control of the
Corporation, or plans or arrangements providing him with substantially similar
benefits (“Securities Plans”), or the taking of any action by the Corporation
which would adversely affect the Executive’s participation in or materially
reduce his benefits under any Securities Plan;


 


(vi)                              a relocation of the
Corporation’s principal executive offices to a location outside of North
Chelmsford, Massachusetts, or the Executive’s relocation to any place other
than the location at which he performed his duties immediately before a Change
in Control of the Corporation, except for required travel on the Corporation’s
business to an extent substantially consistent with the Executive’s business
travel obligations at the time of a Change in Control of the Corporation;


 


(vii)                           any failure by the
Corporation to provide the Executive with the number of annual paid vacation
days to which he is entitled at the time of a Change in Control of the
Corporation;


 


(viii)                        any material breach by the
Corporation of any agreement pursuant to this Program;


 


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(ix)                                any failure by the Corporation
to obtain the assumption of this Program by any successor or assign of the
Corporation; or


 


(x)                                   any purported
termination of the Executive’s employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 4;


 


provided that
no such occurrence may be asserted as Good Reason for an Executive’s
termination of his employment more than six months after the earlier of (y) the
last event constituting such occurrence, or (z) the second anniversary of the
last event constituting the Change in Control.


 


Notwithstanding
anything herein to the contrary, termination of employment by an Executive for
any reason during the 30-day window commencing one (1) year after the date
of a Change in Control shall be deemed to constitute Good Reason.


 


4.                                       Notice of Termination.  Any
termination of an Executive’s employment by the Corporation pursuant to Section 3(a) or
(b) hereof shall be communicated by a written notice indicating the
specific termination provisions in this Program relied upon, and setting 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 (a “Notice
of Termination”).  For purposes of this
Program, no purported termination by the Corporation shall be effective without
a Notice of Termination.


 


5.                                       Date of Termination.  If an
Executive’s employment is terminated by the Corporation for Disability, the
Date of Termination of his employment shall be deemed to occur 30 days after
Notice of Termination is delivered to him, provided that he does not return to
the performance of his duties on a full-time basis during such 30-day period.  In the case of Disability, a Notice of
Termination may not be delivered to the Executive before the expiration of the
period of six months described in Section 3(a).  If an Executive’s employment is terminated by
the Corporation for any other reason, the Date of Termination of his employment
shall be deemed to occur on the date on which Notice of Termination is
delivered; provided that if within 30 days after any Notice of Termination is
given, the Executive notifies the Corporation in writing that a dispute exists
concerning the termination, the Date of Termination shall be the date 14 days
after delivery of such written notification, and the Executive’s duties shall
in any event cease on the date of delivery of the Notice of Termination.


 


6.                                       Severance Pay.


 


(a)                                  If
the Corporation terminates an Executive’s employment other than pursuant to Section 3(a) or
(b) hereof, or if the Executive terminates his employment for Good Reason,
then the Corporation shall pay to the Executive as severance pay in a lump sum
an amount equal to the product of (i) the average of the aggregate annual salary
and bonus paid (including any amounts deferred), during the five calendar years
preceding the Change in Control of the Corporation, to the Executive by the
Corporation and any of its subsidiaries subject to United States or Canadian
income taxes, and (ii) the factor applicable to the Executive in the
following chart:


 


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   Name

   	
    

   	
   Factor

   
	
  J. Conway

  	
   

  	
  3.0

  
	
  R. Story

  	
   

  	
  3.0

  
	
  G. Nichols

  	
   

  	
  3.0

  
	
  P. Folger

  	
   

  	
  3.0

  



 


Any Vice
President of the Corporation with at least ten years of service with the
Corporation or one of its subsidiaries (but only during a period in which the
subsidiary is wholly-owned by the Corporation) shall also be eligible to
receive severance hereunder on the same terms and conditions except that the
factor shall be 2.0 instead of 3.0.  Such
amount shall be paid no later than the fifth day following the Date of
Termination; provided, however, that in the event that the severance payable
hereunder constitutes deferred compensation within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended, payment shall be delayed
until the first day of the seventh month following the Date of Termination.


 


(b)                                 Additional
Limitation.


 


(i)                                     Anything in this
Agreement to the contrary notwithstanding, in the event that any compensation,
payment or distribution by the Corporation to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise (the “Severance Payments”), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”), the following provisions shall apply:


 


(A)                              If
the Severance Payments, reduced by the sum of (1) the Excise Tax and (2) the
total of the Federal, state, and local income and employment taxes payable by
Executive on the amount of the Severance Payments which are in excess of the
Threshold Amount, are greater than or equal to the Threshold Amount, Executive
shall be entitled to the full benefits payable under this Agreement.


 


(B)                                If
the Threshold Amount is less than (x) the Severance Payments, but greater than
(y) the Severance Payments reduced by the sum of (1) the Excise Tax and (2) the
total of the Federal, state, and local income and employment taxes payable by
Executive on the amount of the Severance Payments which are in excess of the
Threshold Amount, then the benefits payable under this Agreement shall be
reduced (but not below zero) to the extent necessary so that the maximum
Severance Payments shall not exceed the Threshold Amount.  To the extent that there is more than one
method of reducing the payments to bring them within the Threshold Amount,
Executive shall determine which method shall be followed; provided that if
Executive fails to make such determination within 15 days after the Corporation
has sent Executive written notice of the need for such reduction, the
Corporation may determine the amount of such reduction in its sole discretion.


 


For the purposes of this Paragraph, “Threshold
Amount” shall mean three times Executive’s “base amount” within the meaning of Section 280G(b)(3) of
the Code


 


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and the regulations promulgated thereunder
less one dollar ($1.00); and “Excise Tax” shall mean the excise tax imposed by Section 4999
of the Code, and any interest or penalties incurred by Executive with respect
to such excise tax.


 


(ii)                                  The determination as
to which of the alternative provisions of Subparagraph (i) above shall
apply to Executive shall be made by a nationally recognized accounting firm
selected by the Corporation (the “Accounting Firm”), which shall provide
detailed supporting calculations both to the Corporation and Executive within
15 business days of the Date of Termination, if applicable, or at such earlier
time as is reasonably requested by the Corporation or Executive.  For purposes of determining which of the
alternative provisions of Subparagraph (i) above shall apply, Executive
shall be deemed to pay Federal income taxes at the highest marginal rate of
Federal income taxation applicable to individuals for the calendar year in
which the determination is to be made, and state and local income taxes at the
highest marginal rates of individual taxation in the state and locality of Executive’s
residence on the Date of Termination, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes.  Any determination by the
Accounting Firm shall be binding upon the Corporation and Executive.


 


7.                                       Continued Benefits.  In the
case of an Executive who becomes entitled to severance pay in accordance with Section 6
hereof, the Corporation shall also provide, at its own expense until December 31
of the second calendar year following the calendar year containing the Date of
Termination, continued coverage for the Executive (and, to the extent that
coverage existed for the Executive’s family members on the Date of Termination,
coverage for the Executive’s family members) under the Corporation’s Group
Health Program.  Notwithstanding the
preceding sentence, no such coverage shall continue after the date on which the
Executive becomes eligible for substantially similar coverage on account of his
employment by an enterprise other than the Corporation or any subsidiary of the
Corporation.


 


8.                                       No Obligation to Mitigate Damages; No Effect on
Other Contractual Rights.  No Executive shall
be required to mitigate damages or the amount of any payment provided for under
this Program by seeking other employment or otherwise, nor shall the amount of
any payment provided under this Program be reduced by any compensation earned
by an Executive as the result of employment by another employer after the Date
of Termination, except as specifically set forth in Section 7 hereof.  No payment provided for hereunder shall
reduce any amounts otherwise payable to the Executive, or in any way diminish
the Executive’s existing rights, or rights which would accrue solely as a
result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement
with the Corporation.


 


9.                                       Successor to the Corporation.  The
Corporation will require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Corporation expressly, absolutely and
unconditionally to assume and agree to perform this Program in the same manner
and to the same extent that the Corporation would be required to perform it if
no such succession or assignment had taken place.  Any failure of the Corporation to obtain such
assumption before the effectiveness of any such succession or assignment shall
entitle an Executive to terminate his


 


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employment
for Good Reason.  The benefits of this
program shall inure to the benefit of and be enforceable by an Executive’s
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. 
If an Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Program to the Executive’s devisee, legatee,
or other designee or, if there be no such designee, to the Executive’s estate.


 


10.                                 Notice.  For purposes of this Program,
notices and all other communications provided for herein shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, as follows:


 


	
  If to the
  Corporation:

  	
   

  	
  Courier
  Corporation

  
	
   

  	
   

  	
  15 Wellman
  Avenue

  
	
   

  	
   

  	
  N.
  Chelmsford, MA  01863

  
	
   

  	
   

  	
   

  
	
  If to the
  Executive:

  	
   

  	
  To his
  address indicated on the Corporation’s records

  



 


or such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.


 


11.                                 Amendment or Termination.  No provision of this Program may be amended or terminated
without the written consent of the Corporation and the Executives.


 


12.                                 Funding of Severance
Obligations.  At the sole discretion of the
Board of Directors, the Corporation may establish a rabbi trust with an independent
bank trustee and may make a contribution to such trust to satisfy the
Corporation’s severance obligations hereunder.


 


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