EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between School Specialty,
Inc., a Wisconsin corporation (the "Company") and wholly-owned subsidiary of
U.S. Office Products Company, a Delaware corporation ("USOP") and Xxxxxx X.
Xxxxxxxx ("Employee") is hereby entered into and effective as of the 29 day of
April, 1996. This Agreement hereby supersedes any other employment agreements or
understandings; written or oral, between the Company, USOP and Employee.
RECITALS
The following statements are true and correct:
On this day the Company, USOP and certain other parties consummated a
transaction contemplated by the Agreement and Plan of Reorganization dated as of
April 29, 1996 by and among the Company, USOP and such other parties.
As of the date of this Agreement, the Company is engaged primarily in the
school products supply business.
Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of his employment with the Company, has and will
continue to become familiar with and aware of information as to the Company's
and USOP's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and USOP, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and USOP; this information is a
trade secret and constitutes the valuable good will of the Company and USOP.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
AGREEMENTS
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as President. As such, Employee
shall have responsibilities, duties and authority reasonably accorded to and
expected of President. Employee will report directly to the Board of Directors
of the Company (the "Board"). Employee hereby accepts this employment upon the
terms and conditions herein contained and agrees to devote his time, attention
and efforts to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Company.
(c) Employee shall not, during the Term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. However, the foregoing limitations shall not be
construed as prohibiting Employee from (i) making personal investments in such
form or manner as will neither require his services in the operation or affairs
of the companies or enterprises in which such investments are made nor violate
the terms of paragraph 3 hereof or (ii) acting as director of charitable or
educational organizations or companies which do not compete with the Company so
long as such activities do not interfere with Employee's performance of his
obligations to the Company.
2. 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 $180,000 per year, payable on a regular basis in accordance
with the Company's standard payroll procedures but not less than monthly. On at
least an annual basis, the Board will review Employee's
performance and may make increases to such base salary if, in its discretion,
any such increase is warranted.
(b) INCENTIVE BONUS PLAN. The Company will develop a written Incentive
Bonus Plan (which may be USOP's Incentive Bonus Plan, provided that it contains
the same terms and provisions for Employee as for USOP employees of similar
standing) setting forth the criteria under which Employee and other officers and
key employees will be eligible to receive year-end bonus awards. The Incentive
Bonus Plan will provide for Employee to earn up to 100% of his base salary in
bonus compensation, payable out of a bonus pool determined by the Board of
Directors of USOP or a compensation committee thereof. Bonuses under the
Incentive Bonus Plan will be determined by measuring Employee's performance, the
Company's performance and USOP's performance based on the following criteria,
weighted as indicated, and measured against target performance levels
established by the Board of Directors of USOP or such compensation committee:
USOP's profit--25%, (ii) the profit of the Company--50%, and (iii) revenue
growth of the Company due to acquisitions--25%.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Employee shall
be entitled to receive additional benefits and compensation from the Company in
such form and to such extent as specified below:
(1) Payment of all premiums (or such portion thereof as is provided by the
Company's or USOP's plans) for coverage for Employee and his dependent
family members under health, hospitalization, disability, dental, life
and other insurance plans that the Company or USOP may have in effect
from time to time, benefits provided to Employee under this clause (1)
to be at least equal to such benefits provided to USOP executives.
(2) Reimbursement for all business travel and other out-of-pocket expenses
reasonably incurred by Employee in the performance of his services
pursuant to this Agreement. 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.
(3) The Company shall provide Employee with other executive perquisites as
may be available to or deemed appropriate for Employee by the Board and
participation in all other Company-wide and USOP-wide employee benefits
as available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Employee will not, during the period of his employment by or with the
Company, and for a period equal to the longer of (i) two (2) years or (ii) the
period during which Employee is entitled to receive and is receiving any payment
pursuant to paragraph 5(d) hereof, immediately following the termination of his
employment under this Agreement, for any reason whatsoever, directly or
indirectly, for himself or on behalf of or in conjunction with any other person,
persons, company, partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner, joint
venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, in any
business selling any products or services in direct competition with the
Company or USOP, within 100 miles of the Company or USOP or where any of the
Company's or USOP's subsidiaries conducts business, including any territory
serviced by the Company or USOP or any of such subsidiaries (the
"Territory");
(ii) call upon any person who is, at that time, within the Territory, an
employee of the Company or USOP (including the respective subsidiaries
thereof) in a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company or USOP
(including the respective subsidiaries thereof).
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(iii) call upon any person or entity which is, at that time, or which has
been, within one (1) year prior to that time, a customer of the Company or
USOP (including the respective subsidiaries thereof) within the Territory
for the purpose of soliciting or selling products or services in direct
competition with the Company or USOP within the Territory;
(iv) call upon any prospective acquisition candidate, on Employee's own
behalf or on behalf of any competitor, which candidate was either called
upon by the Company or USOP (including the respective subsidiaries thereof),
or for which the Company or USOP made an acquisition analysis, for the
purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than one percent (1%)
of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the Company
and USOP as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company and USOP
for which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by USOP or the Company in the event of breach
by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company or USOP (including USOP's other subsidiaries) on the
date of the execution of this Agreement and the current plans of USOP (including
USOP's other subsidiaries); but it is also the intent of the Company and
Employee that such covenants be construed and enforced in accordance with the
changing activities, business and locations of the Company and USOP (including
USOP's other subsidiaries) throughout the term of this covenant.
It is further agreed by the parties hereto that, in the event that Employee
shall cease to be employed hereunder, and shall enter into a business or pursue
other activities not in competition with the Company or USOP (including USOP's
other subsidiaries), or similar activities or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of Employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the Company or USOP (including USOP's other subsidiaries) shall
thereafter enter the same, similar or a competitive (i) business, (ii) course of
activities or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 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 or
USOP, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by USOP or the Company of such covenants, PROVIDED,
however, that upon the failure of the Company to make any payments required
under this Agreement, the Employee may, upon thirty days prior written notice to
the Company, waive his right to receive any additional compensation pursuant to
this Agreement and engage in any activity prohibited by the covenants of this
paragraph 3. It is specifically agreed that the period of two (2) years stated
at the beginning of this paragraph 3, during which the agreements and covenants
of Employee made in this paragraph 3 shall be effective, shall be computed by
excluding from such computation any time during which Employee is in violation
of any provision of this paragraph 3.
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(f) Notwithstanding any of the foregoing, if any applicable law shall reduce
the time period during which Employee shall be prohibited from engaging any any
competitive activity described in paragraph 3(a) hereof, the period of time for
which Employee shall be prohibited pursuant to paragraph 3(a) hereof shall be
the maximum time permitted by law. However, in the event that the time period
specified by paragraph 3(a) shall be so reduced, then, notwithstanding the
provisions of paragraph 5(d) hereof, 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 paragraph 3(a) 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 term provided in paragraph 5(d).
4. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board or USOP 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 other increase in duties and responsibilities. In
such event, if Employee agrees to relocate, the Company will pay all relocation
costs to move Employee, his immediate family and their personal property and
effects. Such costs may include, by way of example, but are not limited to,
pre-move visits to search for a new residence, investigate schools or for other
purposes; temporary lodging and living costs prior to moving into a new
permanent residence; duplicate home carrying costs; all closing costs on the
sale of Employee's present residence and on the purchase of a comparable
residence in the new location; and added income taxes that Employee may incur if
any relocation costs are not deductible for tax purposes. The general intent of
the foregoing is that Employee shall no personally bear any out-of-pocket cost
as a result of the relocation, with an understanding that Employee will use his
best efforts to incur only those costs which are reasonable and necessary to
effect a smooth, efficient and orderly relocation with minimal disruption to the
business affairs of the Company and the personal life of Employee and his
family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c) and, in the
event that Employee is terminated for such refusal, Employee shall be entitled
to receive all payments under this Agreement as if he were terminated by the
Company without cause.
5. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this Agreement
shall begin on the date hereof and continue for four years (the "Initial Term"),
and, unless terminated as herein provided, shall be extended at the end of each
year beginning at the end of the second year of the Initial Term hereof for a
period of one year on the same terms and conditions contained herein, such that
the term (the "Term") of this Agreement shall extend for a period of three years
from the date of such extension. This Agreement and Employee's employment may be
terminated in any one of the following ways:
(a) DEATH. The death of Employee shall immediately terminate the Agreement
with no severance compensation due to Employee's estate.
(b) DISABILITY. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from his full-time duties
hereunder for four (4) consecutive months, then thirty (30) days after written
notice to the Employee (which notice may occur before or after the end of such
four (4) month period, but which shall not be effective earlier than the last
day of such four (4) month period), the Company may terminate Employee's
employment hereunder provided Employee is unable to resume his full-time duties
at the conclusion of such notice period. Also, Employee may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Employee shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Employee shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Employee or Employee's doctor and such doctor shall have concurred in the
conclusion of
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Employee's doctor. Subject to paragraph 3(f) hereof and the last paragraph of
this paragraph 5, in the event this Agreement is terminated as a result of
Employee's disability, Employee shall receive from the Company the base salary
at the rate then in effect for whatever time period is remaining under the Term
of this Agreement, payable over such time period.
(c) GOOD CAUSE. The Company may terminate the Agreement ten (10) days
after written notice to Employee for good cause, which shall be: (1) Employee's
willful, material and irreparable breach of this Agreement which continues after
receipt of ten (10) days prior written notice from the Company to Employee; (2)
Employee's gross negligence in the performance or intentional nonperformance
(continuing for ten (10) days after receipt of written notice of need to cure)
of any of Employee's material duties and responsibilities hereunder; (3)
Employee's willful dishonesty, fraud or misconduct with respect to the business
or affairs of the Company or USOP which materially and adversely affects the
operations or reputation of the Company or USOP; (4) Employee's conviction of a
felony or other crime involving moral turpitude; or (5) alcohol abuse or illegal
drug abuse by Employee. In the event of a termination for good 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 this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Employee.
Should Employee be terminated by the Company without cause, subject to paragraph
3(f) hereof and the last paragraph of this paragraph 5, Employee shall receive
from the Company the base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement, payable over such time
period. If Employee resigns or otherwise terminates his employment for any
reason other than Good Reason as defined in paragraph 5(f), Employee shall
receive no severance compensation.
(e) CHANGE IN CONTROL OF THE COMPANY OR USOP. Refer to paragraph 17 below.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. The Employee may terminate
his employment hereunder for "Good Reason." As used herein, "Good Reason" shall
mean the continuance of any of the following after 10 days' prior written notice
by Employee to the Company and to USOP, specifying the basis for such Employee's
having Good Reason to terminate this Agreement.
(i) a material adverse change in Employee's status, title, position or
responsibilities;
(ii) the assignment to Employee of any duties materially and adversely
inconsistent with the Employee's position as specified in paragraph 1 hereof
(or such other position to which he may be promoted), including status,
offices, responsibilities or persons to whom the Employee reports as
contemplated under paragraph 1 of this Agreement, or any other action by the
Company which results in a material and adverse change in such position,
status, offices, titles or responsibilities;
(iii) Employee's removal from, or failure to be reappointed or reelected
to, Employee's position under this Agreement, except as contemplated by
paragraphs 5(a), (b), (c) and (e); or
(iv) any other material breach of this Agreement by the Company,
including the failure to pay Employee on a timely basis the amounts to which
he is entitled under this Agreement.
In the event of any termination by the Employee for Good Reason, as determined
by a court of competent jurisdiction or pursuant to the provisions of paragraph
15 below, the Company shall pay all amounts and damages to which Employee may be
entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder.
(g) PAYMENT THROUGH TERMINATION. Upon termination of this Agreement 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) 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. All other rights and obligations of USOP, the
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Company and Employee under this Agreement shall cease as of the effective date
of termination, except that the Company's obligations under paragraph 9 herein
and Employee's obligations under paragraphs 3, 6, 7, 8 and 10 herein shall
survive such termination in accordance with their terms.
In the event of any termination of Employee's employment under this Agreement,
the Employee shall have no obligation to seek other employment; PROVIDED,
however, that in the event that Employee secures employment during the period
that any payment is continuing pursuant to the provisions of this paragraph 5,
the amounts to be paid hereunder shall be reduced by the amount of Employee's
earnings from such other employment.
6. RETURN OF COMPANY PROPERTY. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company, USOP or
their representatives, vendors or customers which pertain to the business of the
Company or USOP shall be and remain the property of the Company or USOP, as the
case may be, and be subject at all times to their discretion and control.
Likewise, all correspondence, reports, records, charts, advertising materials
and other similar data pertaining to the business, activities or future plans of
the Company or USOP which is collected by Employee shall be delivered promptly
to the Company without request by it upon termination of Employee's employment.
7. INVENTIONS. Employee shall disclose promptly to USOP and the Company
any and all significant conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, which are conceived or made by
Employee, solely or jointly with another, during the period of employment or
within one (1) year thereafter, and which are directly related to the business
or activities of the Company or USOP and which Employee conceives as a result of
his employment by the Company. 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.
8. TRADE SECRETS. Employee agrees that he will not, during or after the
term of this Agreement with the Company, disclose the specific terms of the
Company's or USOP's relationships or agreements with their respective
significant vendors or customers or any other significant and material trade
secret of the Company or USOP, whether in existence or proposed, to any person,
firm, partnership, corporation or business for any reason or purpose whatsoever.
9. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or USOP against the Employee), by reason of the fact that he is or was
performing services under this Agreement or as an officer or director of the
Company (and whether or not the basis of such action is the Employee's action in
such official capacity), then the Company shall indemnify Employee against all
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith and such indemnification shall continue as to the 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 days after written request therefore by
the Employee to the Company, PROVIDED that such request shall include an
undertaking by the Employee 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 or USOP agrees to engage competent legal representation, and
Employee agrees to use the same representation, provided that if counsel
selected by USOP shall have a conflict of interest that prevents such counsel
from representing Employee, Employee may engage separate counsel and the Company
or USOP shall pay all attorneys' fees of such separate counsel. Further,
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while Employee is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Employee cannot be held liable to the
Company or USOP for errors or omissions made in good faith where Employee has
not exhibited gross, willful or wanton negligence or misconduct or performed
criminal or fraudulent acts which materially damage the business of the Company.
The provisions of this Section 9 are in addition to, and not in derogation of,
the indemnification provisions of the Company's By-Laws.
10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee and 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 employee, client or any other person or
entity. Further, Employee agrees to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses or investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any non-competition
agreement, invention or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
11. 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, he cannot
assign all or any portion of his performance under this Agreement. This
Agreement may not be assigned or transferred by the Company or USOP without the
prior written consent of Employee. Subject to the preceding two (2) 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.
12. COMPLETE AGREEMENT. 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 written Agreement is the final,
complete and exclusive statement and expression of the agreement between the
Company and Employee and of all the terms of this Agreement, and it 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 writing
signed by the party waiving the benefit of such term.
13. NOTICE. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: School Specialty, Inc.
0000 X. Xxxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Vice President
to USOP: U.S. Office Products Company
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Director
To Employee: Xx. Xxxxxx X. Xxxxxxxx
c/o School Specialty, Inc.
0000 X. Xxxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
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Notice shall be deemed given and effective three (3) 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 when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 13.
14. 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. 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.
15. 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. The arbitrators shall have the authority to order back-pay,
severance compensation, vesting of options (or cash compensation in lieu of
vesting of options), reimbursement of costs, including those incurred to enforce
this Agreement, and interest thereon in the event the arbitrators determine that
Employee was terminated without disability or good cause, as defined in
paragraphs 5(b) and 5(c), respectively, or that the Company has otherwise
materially breached this Agreement. 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. The arbitration proceeding shall be
held in the city where the Company is located.
16. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Wisconsin.
17. CHANGE IN CONTROL.
(a) Unless he elects to terminate this Agreement pursuant to (c) below,
Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
In the event of a Change in Control, Employee may, at his sole discretion,
elect to terminate this Agreement by providing written notice to the Company not
later than five (5) business days after the closing of the transaction giving
rise to the Change in Control. In such case, the applicable provisions of
paragraph 5(d) will apply as though the Company had terminated the Agreement
without cause; however, under such circumstances, Employee shall be entitled to
continue to receive his base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for two (2) years,
whichever amount is greater, payable over the term of such payment and the
non-competition provisions of paragraph 3 shall all apply for a period equal to
the duration of such payment.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than USOP or an employee benefit plan of USOP,
acquires directly or indirectly the Beneficial Ownership (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended) of any
voting security of the Company 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 of the
then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the closing date of USOP's initial
public offering, constitute the Board of Directors of USOP (the "Original
Directors") or (B) who thereafter are elected to the Board of Directors of
USOP and whose election, or nomination for election, to the Board of
Directors of USOP was approved by a vote of at least two-thirds ( 2/3) of
the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their
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election) or (C) who are elected to the Board of Directors of USOP and whose
election, or nomination for election, to the Board of Directors of USOP was
approved by a vote of at least two-thirds ( 2/3) of the Original Directors
and Additional Original Directors then still in office (such directors also
becoming "Additional Original Directors" immediately following their
election) (such individuals being the "Continuing Directors"), cease for any
reason to constitute a majority of the members of the Board of Directors of
USOP;
(iii) the shareholders of USOP shall approve a merger, consolidation,
recapitalization, or reorganization of USOP, a reverse stock split of
outstanding voting securities, or consummation of any such transaction if
shareholder approval is not sought or obtained, other than any such
transaction which would result in at least 75% of the total voting power
represented by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at least 75%
of the holders of outstanding voting securities of USOP immediately prior to
the transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in the
transaction; or
(iv) the shareholders of USOP shall approve a plan of complete
liquidation of USOP or an agreement for the sale or disposition by USOP of
all or a substantial portion of USOP's assets (i.e., 50% or more of the
total assets of USOP).
(c) Employee must be notified in writing by the Company at any time that the
Company or any member of its Board anticipates that a Change in Control may take
place.
(d) Employee shall be reimbursed by the Company or its successor for any
excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of his tax
return(s) showing the excise tax actually incurred by Employee.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by telefax) by the parties. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce and account for any of the other
counterparts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SCHOOL SPECIALTY, INC.
By: /s/ XXX X. XXXXXXX
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Title: Secretary
EMPLOYEE:
/s/ XXXXXX X. XXXXXXXX
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Xxxxxx X. Xxxxxxxx
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