Exhibit 10.7
December 13, 2000
|__| Employee's Copy
|__| Employer's Copy
US OFFICE PRODUCTS COMPANY
BUSINESS UNIT RETENTION AGREEMENT
To Xxxx Xxxxx:
US Office Products Company (the "COMPANY") wants to retain your
services during the term of this Agreement for itself and for US Office
Products, North America, the business unit (the "BUSINESS UNIT") for which you
principally work and to which more than 50% of your expenses are allocated for
budget purposes. (This Agreement refers to the Company and the Business Unit
collectively as your "EMPLOYER.") Your Employer values your services,
appreciates your dedication, considers you an important part of its operations,
and wants to retain you and also give you additional incentives to assist in any
possible transaction relating to a possible "CHANGE IN CONTROL" (as defined in
Annex A) of the Company or of the Business Unit, should the Company decide to
pursue any such transaction.
TERM. This Agreement runs from December 1, 2000 (the "EFFECTIVE DATE")
to 5:00 p.m. Eastern Time on November 30, 2002, or if later to the first
anniversary of the first Change in Control that occurs before November 30, 2002
(the "TERM"). Neither you nor your Employer has any obligation to extend the
Term. Even if this Agreement expires or is terminated, you agree to comply with
any paragraphs that state that they continue beyond termination of this
Agreement.
DUTIES. As part of this Agreement, you agree to (i) continue to perform
all of your current duties and comply with your employment agreement (if any)
with your Employer, as any such agreement exists today or is amended or replaced
in the future (the "EMPLOYMENT AGREEMENT"); (ii) assist with various
non-operating activities, which could include outside investment, financing,
transactions, or business reconfiguration as your Employer requests, including
providing all information your Employer considers necessary or appropriate;
(iii) carry out any other tasks your Employer reasonably requests to facilitate
such activities or any Change in Control; and (iv) perform the duties assigned
to you following any such activities, including any Change in Control.
RETENTION PAYMENT. To provide you with special incentives to remain
with your Employer through the Term, your Employer will pay you $100,000.00 (the
"RETENTION PAYMENT") on or around January 15, 2001, reduced by any applicable
withholding and payroll taxes. By accepting this Retention Payment, you agree to
remain with your Employer for a period of 12 months. 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 agree to
repay the "RETENTION PAYMENT AMOUNT" (defined to mean the Retention Payment, net
of taxes paid
and/or withheld and other payroll deductions) within 10 days after
your employment ends if your employment ends before December 31, 2001, except as
provided in this section. Your Employer will forgive repayment of 25% of the
Retention Repayment Amount if your employment ends after June 30, 2001, 50% if
after September 30, 2001, and 100% if after December 31, 2001. Your Employer
will forgive repayment of 100% of the Retention Repayment Amount if you resign
for "Good Reason" (as defined below) following a change in control, your
Employer ends your employment without Cause, you die, or your employment ends
under a "DISABILITY" as defined in your Employment Agreement. If you do not have
an Employment Agreement or it lacks such a definition, you will have a
"DISABILITY" 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 your Employer will terminate your employment
for Disability, and (iii) your Employer does so terminate your employment.
CHANGE IN CONTROL. If a Change in Control occurs during the Term, and
if, within 12 months after the Change in Control, either (i) your Employer
subsequently terminates your employment without Cause or (ii) you resign
subsequently for Good Reason during the Term, then your Employer or the
"Successor" (as defined below) will pay you $708,000.00 (the "SEVERANCE")
(reduced by any applicable withholding taxes) within 10 days after your
employment ends. The Severance will be adjusted, as necessary, to be two times
your then current base salary (annualized) if that amount changes.
If your employment with your Employer terminates for any reason, or
without reason, before the closing of a Change in Control, this CHANGE IN
CONTROL section will terminate on the effective date of such termination of
employment and you will not receive Severance under this Agreement but may still
be eligible for severance under your Employment Agreement (if any) or your
Employer's generally applicable severance policy. However, if your Employer
terminates your employment without Cause within 60 days before, and in
anticipation of, the completion of a Change in Control (that is subsequently
completed), then you will be entitled to receive the Severance as if your
Employer had terminated your employment without Cause after the closing of the
Change in Control (such amounts becoming payable to you after such closing).
TERMINATION AND SEVERANCE. You and your Employer agree that your
Employer may terminate your employment, with or without Cause, or you may
resign. If you resign other than for Good Reason, you must give your Employer
such amount of prior written notice as your Employment Agreement specifies, or,
if none is specified, 14 days' prior written notice. If you resign for Good
Reason, you must give your Employer such amount of prior written notice of the
basis to resign as your Employment Agreement specifies, or, if none is
specified, 14 days' prior written notice, subject to your Employer's right to
cure the situation within 14 days after receipt of notice. If the situation is
cured in this 14-day period, you will not be entitled to resign for Good Reason.
FOR CAUSE. Your Employer may terminate your employment for "CAUSE" if
(i) you breach your obligation to keep the details of your Employer's business
activities and any
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potential Changes in Control and related matters confidential both within and
outside the Company, except as otherwise directed by an officer of your
Employer; (ii) you interfere with your Employer's operations, including through
a breach of your duties as specified in this Agreement or in any Employment
Agreement, or (iii) any of the "Cause" definitions in your Employment Agreement,
if any, apply.
If you do not have an Employment Agreement, CAUSE will also include (i)
your material breach of any confidentiality or noncompete agreement with your
Employer that either cannot be cured or, if curable, is not cured within 10 days
of your receipt of written notice from your Employer specifying the breach; (ii)
your gross negligence in the performance of your duties to your Employer,
intentional nonperformance or mis-performance of such duties, or refusal to
abide by or comply with the directives of the Board of Directors of the Company
(the "BOARD"), your superior officers, or your Employer's policies and
procedures, which actions continue for a period of at least 10 days after your
receipt of written notice of the need to cure or cease; (iii) your willful
dishonesty, fraud, or misconduct with respect to the business or affairs of your
Employer, and that in the judgment of your Employer materially and adversely
affects the operations or reputation of your Employer; (iv) your conviction of a
felony or other crime involving moral turpitude; or (v) your abuse of alcohol or
drugs (legal or illegal) that, in your Employer's judgment, materially impairs
your ability to perform your duties for your Employer.
GOOD REASON. You may resign from employment for "GOOD REASON" during
the Term and within 12 months after an Change in Control if, during the course
of your duties of employment or as a provision of an offer of employment by a
Successor, 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; or
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- 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.
Termination of employment excludes any transfer among the Company and
any entities that are part of its consolidated group.
Your resignation for Good Reason or termination without Cause will not
entitle you to Severance under this Agreement except as provided under CHANGE IN
CONTROL above.
If you resign for Good Reason, you must give your Employer written
notice of your resignation within 30 days after the occurrence of the event that
forms the basis of your Good Reason or within 30 days after receiving notice
from a Successor of its decision to (i) not assume or continue your Employment
Agreement; (ii) do so 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; or (iii) not offer you a written employment agreement on substantially
similar terms as those applicable to persons at your level of employment.
REPAYMENTS. You agree to make any repayments provided under this
Agreement to the entity from which you receive the payment or its successor.
AMENDMENT; WAIVER. Neither you nor your Employer 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. 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 FROM OTHER EMPLOYERS. You are not required to
mitigate the payments under this Agreement by seeking other employment or
otherwise, and your Employer 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.
ASSIGNMENT. Your Employer may assign or otherwise transfer this
Agreement and all of its or their rights, duties, obligations, or interests
under it (i) to any of its or their affiliates or subsidiaries or (ii) to 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. Upon such
assignment or transfer, any such business entity (the "SUCCESSOR") will be
treated as substituted for your Employer for all purposes. Such a transfer or
assignment will not itself constitute your termination of employment without
Cause. This Agreement binds the Company, its successors or assigns, and your
heirs and the personal representatives of your estate. Without the Company's
prior written consent, you may not assign
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or delegate this Agreement or any or all rights, duties, obligations, or
interests under it. YOU AGREE THAT THE ASSUMPTION OF THIS AGREEMENT AND ANY
OTHER SEVERANCE OBLIGATIONS OWED TO YOU BY A SUCCESSOR IN A CHANGE IN CONTROL
RELEASES THE COMPANY AND THE BUSINESS UNIT, EXCEPT TO THE EXTENT IT IS PART OF
THE SUCCESSOR, FROM ANY OBLIGATIONS UNDER THIS AGREEMENT, INCLUDING ANY
SEVERANCE OBLIGATIONS, AND RELEASES AND WAIVES ANY CLAIMS YOU MAY HAVE AGAINST
THE COMPANY OR THE BUSINESS UNIT, EXCEPT TO THE EXTENT IT IS PART OF THE
SUCCESSOR, FOR THE PAYMENT OF SUCH AMOUNTS.
EFFECTS ON EMPLOYMENT OR OTHER RELATIONSHIP. Nothing in this Agreement
restricts your Employer's rights or those of any of its or their affiliates to
terminate your employment or other relationship at any time, with or without
Cause. In that event, you agree that the Severance under this Agreement (as set
forth under CHANGE IN CONTROL above), will be in lieu of, and not in addition
to, any severance payment that otherwise would be payable to you under your
Employment Agreement or other applicable severance policy, except that in no
event will you receive a severance payment less than you would have been
entitled to receive under your Employment Agreement or other applicable
severance policy alone. Except as specified under RETENTION PAYMENTS, this
Agreement will not alter or reduce any right you may have to receive any
incentive compensation under any plan of the Company or Business Unit, whether
pursuant to the terms of your Employment Agreement or the terms of any
applicable incentive compensation plan.
NO EFFECT ON RUNNING BUSINESS. You understand and agree that the
existence of this Agreement will not affect in any way the right or power of the
Company or its stockholders or the Business Unit to make or authorize any
adjustments, recapitalizations, reorganizations, or other changes in Company's
or Business Unit's capital structure or its business, or any merger or
consolidation of the Company or Business Unit, or any issuance of bonds,
debentures, preferred or other stock, with preference ahead of or convertible
into, or otherwise affecting the Company's or Business Unit's common stock or
the rights thereof, or the dissolution or liquidation of the Company or Business
Unit, or any sale or transfer of all or any part of their assets or business, or
any other corporate act or proceeding, whether or not of a similar character to
those described above. Nothing in this Agreement imposes any requirement on the
Company or Business Unit to complete any non-operating activities or any Change
in Control.
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 Business Unit, with a copy to
the Company's General Counsel (and, to the extent that the Company still
controls the Business Unit, with a copy to the Chief Executive Officer of the
Company at the headquarters office of the Company). Your Employer will send or
deliver any notice given to you at your address as reflected on the Company's
personnel records. You and your Employer may change the address for notice by
like notice to the other. You and your Employer 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.
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If you accept the terms of this Agreement, please sign below. We
encourage you to consult with any advisors you choose.
------------------------
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxx
President and CEO
I accept and agree to the terms set forth in this Agreement:
/s/ Xxxx Xxxxx Dated: February 19, 2001
------------------------- -------------------
Xxxx Xxxxx
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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
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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 Business Unit 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 Business Unit's
assets or, for Business Units that are entities, of at least 75% of
the stock of the entity, where a "SUBSTANTIAL PORTION" means at
least 75% of the assets of the business unit 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;
(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,
either with respect to the Company or the Business Unit.
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