EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of this 22nd day of October, 1999
(the "Effective Date"), is by and between US Office Products Company (the
"Company"), a Delaware corporation, and Xxxxxx X. Xxxxxxxxx, an individual
residing at 0000 Xxxx Xxxxxx, Xxxxxx, XX 00000 ("Employee").
RECITALS
The Company desires to continue to employ Employee and to have the
benefit of his skills and services, and Employee desires to continue employment
with the Company, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein, and the performance of each, the
parties hereto, intending legally to be bound, hereby agree as follows:
AGREEMENTS
1. EMPLOYMENT; TERM. The Company hereby employs Employee to perform the
duties described herein, and Employee hereby accepts employment with the
Company, for a term beginning on Effective Date and continuing for a period of
two (2) years (the "Term"). This Agreement may be terminated prior to the end of
the Term in the manner provided for in Section 6 below.
2. POSITION AND DUTIES. The Company hereby employs Employee as
President of the North American Office Supplies Division. As such, Employee
shall have such responsibilities, duties and authority as are delegated to him
from time to time by the Company's Chief Executive Officer and the Company's
Board of Directors (the "Board"). Employee shall report to the Chief Executive
Officer. Employee hereby accepts this employment upon the terms and conditions
herein contained and agrees to devote all of his professional time, attention
and efforts to promote and further the business of the Company. Employee shall
faithfully adhere to, execute, and fulfill all policies established by the
Company. Employee agrees that at all times during the term thereof, he will
devote all of his undivided time during customary business hours to the business
and interest of the Company.
3. COMPENSATION. For all services rendered by Employee, the Company
shall compensate Employee as follows:
(A) BASE SALARY. Effective on the date hereof, the base salary payable
to Employee shall be $300,000 per year, payable on a regular basis in accordance
with the Company's standard payroll procedures, but not less than monthly.
(b) INCENTIVE BONUS. During the Term, Employee shall be eligible to
participate in appropriate executive compensation programs, as determined by the
Company. During the Company's 2000 fiscal year, Employee shall be eligible to
participate in both the Company's Short-Term Management Incentive Compensation
Plan (the "Short-Term Plan") and the Company's Two-Year Special Bonus Plan
(which also will continue into the Company's 2001
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fiscal year). His participation in such programs shall be specified in the terms
of such programs, consistent with his level of responsibility and position. The
Company shall retain complete and absolute discretion at all times to determine
the terms and conditions of such programs, eligibility for participation, and
the criteria, timing, and forms of payment of any incentive or bonus
compensation. In the event that the Short-Term Plan is not continued or is
terminated, the Company shall develop a suitable alternative incentive program
for Employee that is comparable to incentive programs developed for other senior
executives of the Company
(c) PERQUISITES, BENEFITS, AND OTHER COMPENSATION. During the Term,
Employee shall be entitled to receive all perquisites and benefits as are
customarily provided by the Company to its employees, subject to such changes,
additions, or deletions as the Company may make generally from time to time, as
well as such other perquisites or benefits as may be specified from time to time
by the Board or the President of the Company. In addition, during each year of
the Term, Employee shall be entitled to receive four (4) weeks of vacation,
which shall accrue in accordance with the Company's policies. Payment in lieu of
accrued but unused vacation shall be subject to and determined by the Company's
policies.
4. EXPENSE REIMBURSEMENT. The Company shall reimburse Employee for (or,
at the Company's option, pay) all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of his services
hereunder during the Term. The Company shall pay, prior to Employee's relocation
to the Washington, D.C. metropolitan area, the reasonable costs of an apartment,
and related expenses, until March 1, 2001. In addition, during this period the
Company shall reimburse Employee's travel and out-of-pocket expense related to
one weekly round trip commute between Employee's home in Cleveland, Ohio and the
Company's corporate headquarters in Washington, D.C. All reimbursable expenses
shall be appropriately documented in reasonable detail by Employee upon
submission of any request for reimbursement, and in a format and manner
consistent with the Company's expense reporting policy, as well as applicable
federal and state tax record keeping requirements. To the extent reimbursements
related to Employee's lodging in the Washington, D.C metropolitan area or
commuting between Washington, D.C. and Cleveland, OH are deemed by the Company
to be taxable to Employee, the Company shall "gross up" such taxable amounts, in
accordance with prevailing Company policy at the time, in respect of taxes
payable by Employee (in all cases net of any tax benefits to Employee).
5. PLACE OF PERFORMANCE. Unless the Employee otherwise consents, the
principal place of the Employee's employment shall be within a 30-mile radius of
the Washington, D.C. metropolitan area. Employee understands that he may be
requested by the Company to relocate from his present residence to another
geographic location in order to more efficiently carry out his duties and
responsibilities under this Agreement or as part of a promotion or a change in
duties and responsibilities. In such event, if Employee agrees to relocate, the
Company will provide Employee with a relocation allowance, in an amount
determined by the Company, to assist Employee in covering the costs of moving
himself, his immediate family, and their personal property and effects. The
total amount and type of costs to be covered shall be determined by the Company,
in light of prevailing Company policy at the time.
6. TERMINATION; RIGHTS ON TERMINATION. Employee's employment may be
terminated in any one of the followings ways, prior to the expiration of the
Term:
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(a) DEATH. The death of Employee shall immediately terminate the Term,
and no severance compensation shall be owed to Employee's estate.
(b) DISABILITY. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been unable to perform the material
duties of his 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, then 30 days
after written notice to the Employee (which notice may be given before or after
the end of the aforementioned periods, but which shall not be effective earlier
than the last day of the applicable period), the Company may terminate
Employee's employment hereunder if Employee is unable to resume his full-time
duties at the conclusion of such notice period. Subject to Section 6(f) below,
if Employee's employment is terminated as a result of Employee's disability, the
Company shall continue to pay Employee his base salary at the then-current rate
for the lesser of (i) six (6) months from the effective date of termination, or
(ii) whatever time period is remaining under the then-current period of the Term
(without regard to renewals thereof). Such payments shall be made in accordance
with the Company's regular payroll cycle.
(c) TERMINATION BY THE COMPANY "FOR CAUSE." The Company may terminate
the Term 10 days after written notice to Employee "for cause," which shall be:
(i) Employees' material breach of this Agreement that either cannot be cured or,
if curable, is not cured within 10 days of Employee receiving written notice of
such breach from the Company or from USOP; (ii) Employee's gross negligence in
the performance of his duties hereunder, intentional nonperformance or
mis-performance of such duties, or refusal to abide by or comply with the
directives of the Board, his superior officers, or the Company's policies and
procedures, which actions continue for a period of at least 10 business days
after receipt by Employee of written notice of the need to cure or cease; (iii)
Employee's willful dishonesty, fraud, or misconduct with respect to the business
or affairs of the Company, and that in the judgment of the Company materially
and adversely affects the operations or reputation of the Company; (iv)
Employee's conviction of a felony or other crime involving moral turpitude; (v)
Employee's abuse of alcohol or drugs (legal or illegal) that, in the Company's
judgment, materially impairs Employee's ability to perform his duties hereunder.
In the event of a termination "for cause," as enumerated above, Employee shall
have no right to any severance compensation.
(D) WITHOUT CAUSE. At any time after the commencement of employment,
the Company may, without cause, terminate the Term and Employee's employment,
effective 30 days after written notice is provided to the Employee. Should
Employee be terminated by the Company without cause, subject to Section 6(g)
below, Employee shall receive from the Company his base salary at the rate then
in effect for the longer of (i) one (1) year from the date of termination or
(ii) whatever time period is remaining under the Term. Such payments shall be
made in accordance with the Company's regular payroll cycle. If Employee resigns
or otherwise terminates his employment for any reason or for no reason, Employee
shall receive no severance compensation.
(E) NON-CONTINUANCE. If, within (60) days after the last day of the
Term, the Company terminates Employee's employment "without cause," Employee
shall receive from the Company, as severance, his base salary for a period
ending on the first anniversary of the last day of the Term. Such payments shall
be made in accordance with the Company's regular payroll cycle
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(f) PAYMENT THROUGH TERMINATION. Upon termination of Employee's
employment for any reason provided above, Employee shall be entitled to receive
all compensation earned and all benefits and reimbursements (including payments
for accrued vacation and sick leave, in each case in accordance with applicable
policies of the Company) due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to Employee only to the extent and in the manner expressly provided
above in this Section 6. All other rights and obligations the Company, and
Employee under this Agreement shall cease as of the effective date of
termination, except that the Employee's obligations under Sections 7, 8, 9 and
10 below shall survive such termination in accordance with their terms.
(g) RIGHT TO OFFSET. In the event of any termination of Employee's
employment under this Agreement, the Employee shall have no obligation to seek
other employment; PROVIDED, that in the event that Employee secures employment
or any consulting or other similar arrangement during the period that any
payment is continuing pursuant to the provisions of this Section 6, the Company
shall have the right to reduce the amounts to be paid hereunder by the amount of
Employee's earnings from such other employment.
7. RESTRICTION ON COMPETITION.
(a) During the Term, and thereafter, if Employee continues to be
employed by the Company and/or any other entity owned by or affiliated with the
Company on an "at will" basis, for the duration of such period, and thereafter
for a period equal to the longer of (x) one year, or (y) the period during which
Employee is receiving any severance pay from the Company, Employee shall not,
directly or indirectly, for himself or on behalf of or in conjunction with any
other person, company, partnership, corporation, business, group, or other
entity (each, a "Person"):
(i) engage as an employee, officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity, or as an
independent contractor, consultant, advisor, or sales representative or in any
other similar capacity in any business selling office supplies, office
furniture, or office coffee or vending products or services that competes
directly with the Company and has an office within 50 miles of any location
where the Company has an office;
(ii) hire or solicit any Person who is, at that time, an
employee of the Company for the purpose or with the intent of enticing such
employee away from or out of the employ of the Company; or
(iii) solicit any Person who is, at that time, or has been,
within one year prior to that time, a customer of the Company for the purpose of
soliciting from, or selling to, such Person office products, office furniture,
or office coffee or vending products or services in competition with the
Company.
(b) In view of the Company's extensive involvement in offering products
and services to customers and prospective customers through the Internet (as an
enhancement to its traditional business activities), the restriction in clause
(a)(i) also shall apply to any Person that does not otherwise fall within the
scope of clause (a)(i) but that offers office supplies, office furniture, or
office coffee or vending products or services to customers through the Internet,
if such Person holds itself out as being able to distribute (directly or through
a third party) such
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products or services to any customer location within 50 miles of any location
where the Company has an office.
(c) The foregoing covenants shall not be deemed to prohibit Employee
from acquiring as an investment not more than one percent of the capital stock
of a competing business.
(d) The covenants in this Section 7 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. If any provision of this Section 7 relating to the time period
or geographic area of the restrictive covenants shall be declared by a court of
competent jurisdiction to exceed the maximum time period or geographic area, as
applicable, that such court deems reasonable and enforceable, said time period
or geographic area shall be deemed to be, and thereafter shall become, the
maximum time period or largest geographic area that such court deems reasonable
and enforceable and this Agreement shall automatically be considered to have
been amended and revised to reflect such determination.
(e) All of the covenants in this Section 7 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants. It is specifically
agreed that the period of one year stated at the beginning of this Section 7,
during which the agreements and covenants of Employee made in this Section 7
shall be effective, shall be computed by excluding from such computation any
time during which Employee is in violation of any provision of this Section 7.
(f) If the time period specified by this Section 7 shall be reduced by
law or court decision, then, notwithstanding the provisions of Section 6 above,
Employee shall be entitled to receive from the Company his base salary at the
rate then in effect solely for the longer of (i) the time period during which
the provisions of this Section 7 shall be enforceable under the provisions of
such applicable law, or (ii) the time period during which Employee is not
engaging in any competitive activity, but in no event longer than the applicable
period provided in Section 6 above.
(g) For purposes of this Section 7, it is agreed that the term
"Company" shall include US Office Products Company and all of its subsidiaries.
(h) Employee has carefully read and considered the provisions of this
Section 7 and, having done so, agrees that the restrictive covenants in this
Section 7 impose a fair and reasonable restraint on Employee and are reasonably
required to protect the valuable and legitimate business interests of the
Company and its subsidiaries. Employee also expressly acknowledges and agrees
that because he is a senior executive officer of the Company with access to a
broad range of valuable, confidential, and proprietary strategic and operational
information about the Company's and its subsidaries operations throughout North
America, the geographic scope of this Section 7 is fair, reasonable, and
necessary to protect the valuable and legitimate business interests of the
Company and its subsidiaries.
8. CONFIDENTIAL INFORMATION. Employee hereby agrees to hold in strict
confidence and not to disclose to any third party any of the valuable,
confidential, and proprietary business,
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financial, technical, economic, sales, and/or other types of proprietary
business information relating to the Company (including all trade secrets), in
whatever form, whether oral, written, or electronic (collectively, the
"Confidential Information"), to which Employee has, or is given (or has had or
been given), access as a result of his employment by the Company. It is agreed
that the Confidential Information is confidential and proprietary to the Company
because such Confidential Information encompasses technical know-how, trade
secrets, or technical, financial, organizational, sales, or other valuable
aspects of the Company's business and trade, including, without limitation,
technologies, products, processes, plans, clients, personnel, operations, and
business activities. This restriction shall not apply to any Confidential
Information that (a) becomes known generally to the public through no fault of
the Employee; (b) is required by applicable law, legal process, or any order or
mandate of a court or other governmental authority to be disclosed; or (c) is
reasonably believed by Employee, based upon the advice of legal counsel, to be
required to be disclosed in defense of a lawsuit or other legal or
administrative action brought against Employee; PROVIDED, that in the case of
clauses (b) or (c), Employee shall give the Company reasonable advance written
notice of the Confidential Information intended to be disclosed and the reasons
and circumstances surrounding such disclosure, in order to permit the Company to
seek a protective order or other appropriate request for confidential treatment
of the applicable Confidential Information. For purposes of this Section 8, it
is agreed that the term "Company" shall include US Office Products Company and
all of its subsidiaries
9. INVENTIONS. Employee shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, that are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
year thereafter, and that are directly related to the business or activities of
the Company and that Employee conceives as a result of his employment by the
Company, regardless of whether or not such ideas, inventions, or improvements
qualify as "works for hire." Employee hereby assigns and agrees to assign all
his interests therein to the Company or its nominee. Whenever requested to do so
by the Company, Employee shall execute any and all applications, assignments, or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
10. RETURN OF COMPANY PROPERTY. Promptly upon termination of Employee's
employment by the Company for any reason or no reason, Employee or Employee's
personal representative shall return to the Company (a) all Confidential
Information; (b) all other records, designs, patents, business plans, financial
statements, manuals, memoranda, lists, correspondence, reports, records, charts,
advertising materials, and other data or property delivered to or compiled by
Employee by or on behalf of the Company or it's respective representatives,
vendors, or customers that pertain to the business of the Company, whether in
paper, electronic, or other form; and (c) all keys, credit cards, vehicles, and
other property of the Company. Employee shall not retain or cause to be retained
any copies of the foregoing. Employee hereby agrees that all of the foregoing
shall be and remain the property of the Company and be subject at all times to
it's discretion and control.
11. INDEMNIFICATION. In the event Employee is made a party to any
threatened or pending action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by the Company against
Employee, and excluding any action by Employee against the Company), by reason
of the fact that he is or was performing services under this Agreement or as an
officer or director of the Company, then, to the fullest extent permitted by
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applicable law, the Company shall indemnify Employee against all expenses
(including reasonable attorneys' fees), judgments, fines, and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. Such indemnification shall continue as to Employee even if he has
ceased to be an employee, officer, or director of the Company and shall inure to
the benefit of his heirs and estate. The Company shall advance to Employee all
reasonable costs and expenses directly related to the defense of such action,
suit, or proceeding within twenty (20) days after written request therefore by
Employee to the Company; PROVIDED, that such request shall include a written
undertaking by Employee, in a form acceptable to the Company, to repay such
advances if it shall ultimately be determined that Employee is or was not
entitled to be indemnified by the Company against such costs and expenses. In
the event that both Employee and the Company are made a party to the same
third-party action, complaint, suit, or proceeding, the Company will engage
competent legal representation, and Employee agrees to use the same
representation; PROVIDED, that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all reasonable
attorneys' fees of such separate counsel. The provisions of this Section 11 are
in addition to, and not in derogation of, the indemnification provisions of the
Company's By-laws. The foregoing indemnification also shall be applicable to
Employee in his capacity as an officer, director, or representative of any
subsidiary of the Company, or any other entity, but in each case only to the
extent that Employee is serving at the request of the Board or the Board of
Directors of the Company.
12. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee, his employment by the
Company, and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other Person.
Further, Employee agrees to indemnify and hold harmless the Company and its
officers, directors, and representatives for any claim, including, but not
limited to, reasonable attorneys' fees and expenses of investigation, of any
such third party that such third party may now have or may hereafter come to
have against the Company or such other persons, based upon or arising out of any
non-competition agreement, invention, secrecy, or other agreement between
Employee and such third party that was in existence as of the date of this
Agreement. To the extent that Employee had any oral or written employment
agreement or understanding with the Company, this Agreement shall automatically
supersede such agreement or understanding, and upon execution of this Agreement
by Employee and the Company, such prior agreement or understanding automatically
shall be deemed to have been terminated and shall be null and void.
13. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience, and skills. Employee agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement. This
Agreement may not be assigned or transferred by the Company without the prior
written consent of Employee. Subject to the preceding two sentences, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective heirs, legal representatives,
successors, and assigns. Notwithstanding the foregoing, if Employee accepts
employment with a subsidiary or affiliate of the Company, unless Employee and
his new employer agree otherwise in writing, this Agreement shall automatically
be deemed to have been assigned to such new employer (which shall thereafter be
an additional or substitute beneficiary of the covenants contained herein, as
appropriate), with the consent of Employee, such assignment shall be considered
a condition of employment by such new employer, and references to the "Company"
in this Agreement shall be deemed to refer to such new employer.
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14. COMPLETE AGREEMENT; WAIVER; AMENDMENT. This Agreement is not a
promise of future employment. Employee has no oral representations,
understandings, or agreements with the Company or any of its officers,
directors, or representatives covering the same subject matter as this
Agreement. This Agreement is the final, complete, and exclusive statement and
expression of the agreement between the Company and Employee with respect to the
subject matter hereof and cannot be varied, contradicted, or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a further writing signed
by a duly authorized officer of the Company and Employee, and no term of this
Agreement may be waived except by a writing signed by the party waiving the
benefit of such term.
15. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: US Office Products Company
0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X.
Suite 600 East
Washington, D.C. 20007
Attention: General Counsel
To Employee: Xxxxxx X. Xxxxxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Notice shall be deemed given and effective three days after the deposit in the
U.S. mail of a writing addressed as above and sent first class mail, certified,
return receipt requested, or, if sent by express delivery, hand delivery, or
facsimile, when actually received. Either party may change the address for
notice by notifying the other party of such change in accordance with this
Section 15.
16. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. This
severability provision shall be in addition to, and not in place of, the
provisions of Section 7(d) above. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
17. EQUITABLE REMEDY. Because of the difficulty of measuring economic
losses to the Company as a result of a breach of the restrictive covenants set
forth in Sections 7, 8, 9 and 10, and because of the immediate and irreparable
damage that would be caused to the Company for which monetary damages would not
be a sufficient remedy, it is hereby agreed that in addition to all other
remedies that may be available to the Company at law or in equity, the Company
shall be entitled to specific performance and any injunctive or other equitable
relief as a remedy for any breach or threatened breach of the aforementioned
restrictive covenants.
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18. ARBITRATION. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
conducted in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company. Each party shall bear its own counsel fees. The
arbitration proceeding shall be held in Washington, D.C. Notwithstanding the
foregoing, the Company shall be entitled to seek injunctive or other equitable
relief, as contemplated by Section 17 above, from any court of competent
jurisdiction, without the need to resort to arbitration.
19. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the District of Columbia, without regard to its
conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
duly executed as of the date first written above.
US OFFICE PRODUCTS COMPANY
By: \s\ XXXX X. DIRECTOR
Name: Xxxx X. Director
Title: Executive Vice President
EMPLOYEE:
\s\ XXXXXX X. XXXXXXXXX
Xxxxxx X. Xxxxxxxxx
