Exhibit 10.5
Revised on January 8, 2001; replaces the Special Retention Agreement dated
December 19, 2000
|__| Employee's Copy
|__| Employer's Copy
SPECIAL RETENTION AGREEMENT
To Xxxxxx Xxxxx:
U S Office Products Company (the "COMPANY") wants to retain your
services and to work with you towards the execution of a mutually acceptable new
employment agreement ("NEW AGREEMENT") or amendment to your existing employment
agreement ("AMENDMENT").
RETENTION PAYMENT. To provide you with special incentives to remain
with the Company during the next 9 months, the Company will pay you a retention
payment of $477,500.00 (the "RETENTION PAYMENT") in two parts. You will receive
the first part of the retention payment, $277,500.00, on or before December 31,
2000, reduced by any applicable withholding taxes and withheld 401(k) deferrals.
You will receive the second part of the retention payment, $200,000.00, on or
before January 15, 2001, reduced by any applicable withholding taxes and
withheld 401(k) deferrals. By accepting this Retention Payment, you agree to
remain with the Company for a period of 9 months from the date of this
Agreement. In addition, you agree to accept this payment in lieu of any payment
under the FY 2001 Short Term Incentive Plan, excluding any short-term incentive
payment for which you may be eligible under the change in control terms
specified in that plan. You understand and agree that the Retention Payment is
part of a special compensation program that the Company has described to you and
the complete terms of which will be reflected in the New Agreement or Amendment.
You agree to repay the "RETENTION REPAYMENT AMOUNT" (defined to mean
the Retention Payment, net of taxes paid and/or withheld and withheld 401(k)
deferrals) by the earlier of (a) 10 days after your employment ends if your
employment ends before September 30, 2001, except as provided in this paragraph,
or (b) February 15, 2001 if you and the Company have failed to execute a
mutually acceptable New Agreement or Amendment by January 31, 2001. If you sign
a New Agreement or Amendment by January 31, 2001, the Company will thereafter
forgive repayment of 25% of the Retention Repayment Amount if your employment
ends after June 30, 2001 and 100% if after September 30, 2001. If you sign a New
Agreement or Amendment by January 31, 2001, the Company will forgive repayment
of 100% of the Retention Repayment Amount if you resign for Good Reason (if your
employment agreement provides for "Good Reason" resignation) prior to a Change
in Control (as defined in Annex A), if you resign for Good Reason (as defined in
Annex B) at the time of or following a Change in Control, the Company ends your
employment without Cause, you die, or your employment ends under a Disability.
For purposes of this Agreement, "CAUSE" has the definition contained in
your current employment agreement with the Company (or, after execution of the
New Agreement or Amendment, the terms of such New Agreement or Amendment). For
the purposes of this Agreement, "GOOD REASON" has the definition, if any,
contained in your current employment
agreement with the Company (or, after execution of the New Agreement or
Amendment, the terms of such New Agreement or Amendment) except that at the time
of or following a Change of Control but prior to the execution of a New
Agreement or Amendment, "GOOD REASON" has the definition contained in Annex B.
For the avoidance of doubt, regardless of any definition of "GOOD REASON" in
your current employment agreement or this Agreement, any failure by you and the
Company to agree upon a mutually acceptable Amendment or New Agreement shall not
constitute "GOOD REASON" for purposes of entitling you to forgiveness of the
repayment obligations imposed on you under this Agreement. If not otherwise
defined in your employment agreement, you will have a "DISABILITY" solely for
purposes of this Agreement if, as a result of incapacity due to physical or
mental illness or injury, (i) you have been unable to perform the material
duties of your position on a full-time basis for a period of four consecutive
months, or for a total of four months in any six-month period, (ii) you are
unable to resume your full-time duties within 30 days after written notice to
you (given before or after the end of the preceding periods, but not effective
earlier than the last day of the applicable period) that the Company will
terminate your employment for Disability, and (iii) the Company does so
terminate your employment.
RESTRUCTURING BONUS. You understand and agree that certain provisions
of your current employment agreement including, but not limited to, terms
relating to automatic renewal of the term of the agreement, terms relating to a
Change in Control, and the effect and scope of restrictive covenants will be
restructured in a New Agreement or by way of an Amendment (the "RESTRUCTURING").
As consideration for your prior agreement to the Restructuring, the Company will
pay you $277,500.00 (the "RESTRUCTURING BONUS") on or before December 31, 2000,
reduced by any applicable withholding taxes and withheld 401(k) deferrals. By
accepting this Restructuring Bonus, you agree to cooperate with the Company in
the good faith negotiation and prompt execution of a New Agreement or Amendment,
which will include, but not be limited to, the Restructuring. In addition to
repayment of the Retention Repayment Amount, as provided above, you agree to
repay the "RESTRUCTURING BONUS AMOUNT" (defined to mean the Restructuring Bonus,
net of taxes paid and/or withheld and withheld 401(k) deferrals) if you and the
Company are unable to agree on a mutually acceptable New Agreement or Amendment
by January 31, 2001, such repayment to be made no later than February 15, 2001.
REPAYMENT. You agree to make any repayments provided under this
Agreement to the Company or its successor.
AMENDMENT; WAIVER. Neither you nor the Company may modify, amend, or
waive the terms of this Agreement other than by a written instrument signed by
you and an executive officer of the Company, with the prior approval of the
Board of Directors of the Company (the "BOARD"). Either party's waiver of the
other's compliance with any provision of this Agreement does not waive any other
provision of this Agreement or any subsequent breach by such party of a
provision of this Agreement.
NO MITIGATION OR OFFSET. You are not required to mitigate the payments
under this Agreement, and the Company will not offset its obligations under this
Agreement to reflect compensation you receive from other employers.
GOVERNING LAW. The laws of the state in which your principal place of
employment lies (other than its conflict of laws provisions) govern this
Agreement.
EFFECTS ON EMPLOYMENT OR OTHER RELATIONSHIP. Nothing in this Agreement
restricts the Company's rights or those of any of its affiliates to terminate
your employment or other relationship at any time, with or without Cause.
NOTICES. Notices must be given in writing by personal delivery, by
certified mail, return receipt requested, by telecopy, or by overnight delivery.
You should send or deliver your notices to the Company's corporate headquarters,
addressed to the Chief Executive Officer of the Company, with a copy to the
Company's General Counsel. The Company will send or deliver any notice given to
you at your address as reflected on the Company's personnel records. You and the
Company may change the address for notice by like notice to the other. You and
the Company agree that notice is received on the date it is personally
delivered, the date it is received by certified mail, the date of guaranteed
delivery by the overnight service, or the date the fax machine confirms
effective transmission.
If you accept the terms of this Agreement, please sign below. We
encourage you to consult with any advisors you choose.
US Office Products Company
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxx
President and CEO
I accept and agree to the terms set forth in this Agreement:
/s/ Xxxxxx X. Xxxxx Dated: January 8, 2001
-------------------------- ------------------
Xxxxxx X. Xxxxx
ANNEX A
A "CHANGE IN CONTROL" means any of the following events after the Effective
Date:
(i) any Person, other than one or more Excluded Persons, acquires directly
or indirectly, in one or a series of transactions, the Beneficial
Ownership of any voting securities of the Company (the "COMPANY VOTING
SECURITIES") and immediately after such acquisition, such Person is,
directly or indirectly, the Beneficial Owner of voting securities
representing 50% or more of the total voting power of all the
then-outstanding Company Voting Securities, where
(I) "BENEFICIAL OWNERSHIP," "BENEFICIAL OWNER," and "BENEFICIALLY
OWN" have the meanings provided under, and shall be calculated in
the manner provided in, Rule 13d-3 under the Securities Exchange
Act of 1934 ("EXCHANGE ACT"), as amended, but without regard to
whether a right to acquire securities is exercisable within 60
days of the date on which ownership is being calculated;
(II) "EXCLUDED PERSON" means a Person that is or includes (in a Group)
the Company; any majority-owned subsidiary (whether in corporate
or other form) of the Company; with respect to the Participant,
the Participant if he or she has a direct or indirect Beneficial
Ownership in the acquiring Person of at least 5%; or, solely with
respect to (i) above, Xxxxxxx, Dubilier & Rice; and
(III) "PERSON" means any individual, entity, or "GROUP" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act);
(ii) except as provided in subparagraph (ii)(I), the Company completes a
merger, consolidation, recapitalization, or reorganization of the
Company (an "EVENT").
(I) An Event does not constitute a Change in Control if the
Beneficial Owners of the Company Voting Securities outstanding
immediately before such Event ("OLD OWNERS") Beneficially Own
securities that represent immediately after such Event at least
50% of the combined voting power of the then outstanding voting
securities of either the Company or the other surviving entity or
its ultimate parent (the "RESULTING VOTING SECURITIES") (in other
words, an Event is not a Change in Control unless Beneficial
Owners who were not Beneficial Owners pre-Event ("NEW OWNERS")
have Beneficial Ownership of more than 50% of the Resulting
Voting Securities).
(II) For purposes of applying the exception set forth in subparagraph
(ii)(I) of this definition, if an Old Owner Beneficially Owns a
greater number of the Resulting Voting Securities immediately
after the Event than the number the Old Owner received solely as
a result of the Event, that excess
ownership will be treated as held by a New Owner and thus count
against the 50% continuity test (making it more likely that a
Change in Control occurred if a Person's Beneficial Ownership
increased disproportionately in connection with the Event);
(iii) the Company on a consolidated controlled group basis undergoes a
sale, disposition, spin-off, or liquidation, other than to an Excluded
Person, of a Substantial Portion, in one or a series of transactions,
of the Company's assets, where a "Substantial Portion" means
(I) at least 50% of the assets of the Company measured by their book
value as compared with the book value of such assets as of April
27, 2000 (the "STARTING VALUE") (provided that if the book value
of an asset is reduced or increased after April 27, 2000 due to
(X) a change in accounting policies or methods, (Y) a write-up or
write-down in asset value as required by the financial policies
of the Company or its auditors due to a change in market
conditions, the value of goodwill, or other similar factors or
conditions (but not because of the sale or purchase of assets),
or (Z) other similar accounting or auditing requirements, the
Starting Value of such asset shall be adjusted to be equal to the
adjusted asset valuation (less the aggregate amount of any
amortization or depreciation of such asset from April 27, 2000
through the date of revaluation), where the determination of
asset value and any decline of asset value for this purpose will
be made by the Board, by reference to the Company's financial
statements and after consultation with the Company's independent
auditors, WHICH DETERMINATION YOU HEREBY AGREE WILL BE FINAL AND
BINDING; or
(II) either Mail Boxes Etc. or USOP - North America, and 75% of the
Starting Value of assets in neither Mail Boxes Etc. nor USOP -
North America;
(iv) at any point after the Effective Date, Incumbent Directors cease to be
a majority of the members of the Board, where an "INCUMBENT DIRECTOR"
is (I) an individual who is a member of the Board on the Effective
Date or (II) any new director whose appointment or election by the
Board or whose nomination for election by the stockholders was
approved by two-thirds (2/3) of the persons who were already Incumbent
Directors, other than any individual who assumes office initially as a
result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(v) the Board or its Compensation Committee determines that it is
substantially likely that one of the foregoing events will occur.
ANNEX B
For purposes of this Agreement, "GOOD REASON" means if, at the time of or
following a Change in Control and during the course of your duties of employment
or as a provision of an offer of employment by a Successor (as defined below),
you are, without your written consent, subject to:
- A material decrease in job duties or scope of responsibility,
including revenue responsibility, but excluding a change in
title, officer status, and/or reporting relationship;
- A reduction in your base salary of greater than 10% on an annual
basis or a reduction in your combined annual base salary and
short term incentive bonus target of greater than 20%;
- A change in your principal place of employment after, or in
anticipation of, a Change in Control such that your daily commute
from your residence as of the date immediately prior to the date
on which the place of employment is relocated increases by at
least 25 miles;
- Your Employment Agreement, if any, (including, without
limitation, any severance obligations under this Agreement) (i)
not being assumed by a Successor or not otherwise remaining in
full force and effect following any Change in Control, or (ii)
such assumption or continued effect is for a period less than the
greater of your then remaining term under such Employment
Agreement or the first anniversary of the Change in Control;
- A Successor's refusing to offer you a written employment
agreement on substantially similar terms as those applicable to
persons at your level of employment and you had an Employment
Agreement in effect with your Employer before a Change in
Control; or
- the Company on a consolidated controlled group basis undergoes a
sale, disposition, spin-off, or liquidation, other than to an
Excluded Person (as defined in Annex B), of (i) either Mail Boxes
Etc. or USOP - North America; and (ii) 75% of the assets of the
Company in neither Mail Boxes Etc. nor USOP - North America
measured by their book value as compared with the book value of
such assets as of April 27, 2000 (the "STARTING VALUE") (provided
that if the book value of an asset is reduced or increased after
April 27, 2000 due to (X) a change in accounting policies or
methods, (Y) a write-up or write-down in asset value as required
by the financial policies of the Company or its auditors due to a
change in market conditions, the value of goodwill, or other
similar factors or conditions (but not because of the sale or
purchase of assets), or (Z) other similar accounting or auditing
requirements, the Starting Value of such asset shall be adjusted
to be equal to the adjusted asset valuation (less the aggregate
amount of any amortization or depreciation of such asset from
April 27, 2000 through the date of
revaluation), where the determination of asset value and any
decline of asset value for this purpose will be made by the
Board, by reference to the Company's financial statements and
after consultation with the Company's independent auditors, WHICH
DETERMINATION YOU HEREBY AGREE WILL BE FINAL AND BINDING.
"SUCCESSOR" means any business entity that at any time by merger, consolidation,
or otherwise acquires all or substantially all of the Company's stock or assets
or to which the Company transfers all or substantially all of its assets or that
acquires substantially all of the stock or assets of the Business Unit.
